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Published: Saturday, 12/10/2005

Media Play chain to shut all stores

BY MARY-BETH McLAUGHLIN
BLADE BUSINESS WRITER

Two Toledo area stores are among 61 Media Play outlets being closed next month because the chain is unprofitable, its parent company said yesterday.

News of the closings comes amid the typically busy Christmas shopping season, but the chain selling music, books, video games, and movie DVDs was unable to compete.

"That chain has been unprofitable for a number of years," said Laurie Bauer, a spokesman for Musicland Group Inc., the parent company based in a Minneapolis suburb.

"We worked very hard in trying to turn it around but we couldn't."

Merchandise is to be marked down starting this weekend, and the stores are expected to close in mid to late January, she said.

Employees learned of the closings yesterday. The company has eight stores in Ohio, including one at 5223 Monroe St. in Toledo and one at 1405 Spring Meadows Dr. in Holland. Each store employs 35 part and full-time employees.

Media Play is one of three store chains Musicland operates. The chain was begun in 1992 and has stores in 18 states.

George Sutton, an equity research analyst at Craig-Hallum Capital Group LLC, Minneapolis, said Media Play's biggest problem is that "the electronic world has caught up to them.

"I'm referring to Amazon.com, Napster, etc." he said. "The concept of a great selection in a retail store was somewhat unique 10 years ago, but today you can get all that online and from a number of other sources."

The Musicland Group was owned by Best Buy Co. from 2000 to 2003, when it was sold to Sun Capital Partners, a private investment firm in Boca Raton, Fla.

Sun Capital quickly moved to shut down unprofitable locations but was hurt by a number of high-rent leases it could not shed.

"Best Buy, which has pretty good experience running retail stores, was not able to make it work, to say the least," said Lehman Brothers retail analyst Alan Rifkin.

Management employees will get severance pay and, if feasible, employees may be offered jobs at the company's two other chains, Sam Goody and Suncoast. Those chains, which are not affected by the Media Play closings, have 850 stores nationwide, mostly in malls.

There are Sam Goody stores in Sandusky, Bowling Green, and Fremont in northwest Ohio, as well as one in Adrian, while there is a Suncoast store in Sandusky. Sam Goody focuses on music items, such as compact discs, while the Suncoast stores carry movies and movie memorabilia.

Media Play, however, attempted to cater to a wider audience, which put it into direct competition with many players, such as Wal-Mart, Target, Best Buy, Circuit City, and online stores, Ms. Bauer said.

"We just couldn't quite find the niche for it," she said.

Contact Mary-Beth McLaughlin at

mmclaughlin@theblade.com

or 419-724-6199.



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