Sound Control in administration - PSNEurope

Sound Control in administration

UK: Sound Control, the UK's largest MI retailer and the owner of Turnkey, Media Tools and Soho Soundhouse, has gone into administration. Dunfermline-based Sound Control Group, which comprised 26 stores across the UK and was established by managing director Pat Kelly (pictured), had been the subject of speculation and rumours for many months, and was believed to have been in discussion with several potential buyers in the weeks before its collapse, writes Gary Cooper.
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UK: Sound Control, the UK's largest MI retailer and the owner of Turnkey, Media Tools and Soho Soundhouse, has gone into administration. Dunfermline-based Sound Control Group, which comprised 26 stores across the UK and was established by managing director Pat Kelly (pictured), had been the subject of speculation and rumours for many months, and was believed to have been in discussion with several potential buyers in the weeks before its collapse, writes Gary Cooper.

John Reid and Bill Dawson of Deloitte have now been appointed to oversee the company's affairs. "Following a review of the Group's operations, the administrators have today made the difficult decision to close 10 of the Group's trading locations and bring to an end its telesales and internet sales activities," commented Reid. "These changes to the Group's operations have resulted in 163 redundancies with immediate effect.

"The administrators welcome interest in the business and assets of the Group and are already in discussions with a number of interested parties to explore a possible sale. However, at the same time as they explore sale options, the administrator will continue to trade the remaining 16 stores, selling high quality musical instruments to the public."

While major suppliers are expected to suffer considerable losses, fears are strongest for mid-level wholesalers and distributors, particularly in the MI sector. Interest in the remaining stores is expected to be mixed, but Turnkey seems likely to be fought over by potential buyers.

Reacting to the news, Bob Thomas - MD of Cadac, former MD of TEAC UK, and a member of the Music Industry Association's Council - commented: "The original plan - borrowing to expand a small chain of stores - was fine, but Academy of Sound came up for sale and they made their first mistake there. It was an opportunity they couldn't resist but it hadn't been in their original business plan. They should have leveraged their advantages, closed duplicate stores, sorted out their logistics [and] HR, and strengthened their management team to accommodate that growth. Then they bought Turnkey and, again, it wasn't in the original business plan and they didn't leverage their advantages. This was about management - it was an internal failure, not external."

Chris Gooddie, sales director at Focusrite, added: "We're extremely sorry for all our good friends who have lost their jobs. On the financial side, clearly it will have a significant impact on suppliers, whether in pro-audio or MI. Wholesale suppliers will have to look at their practices and will have to look at their credit limits, which will be tighter than they were in the old days. That means a tightening-up at a time when it's the last thing the industry needs. Perhaps in some ways it will make the industry slightly more professional but it will exacerbate the current market conditions for the remaining dealers."

Web » www.deloitte.co.uk

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