Labels halt credit to ailing Woolies.

Woolworths' woes send tremors throughout music retail as EUK is refused credit

By Paul Williams & Ben Cardew

The music industry is facing a potential crisis at retail heading into quarter four after labels last week refused credit to EUK because of fears about its owner Woolworths Group's financial future.

Woolworths said in a statement, "While it is true that some credit insurers are tightening terms of trade, we are trading as normal with our suppliers and will continue to do so."

However, Music Week understands most key suppliers last week took the step of putting the leading entertainment distributor on credit hold after they found they could no longer secure credit insurance for their supplies in case anything happened to the Woolworths Group. It is understood games and DVD suppliers have made the same decision.

As Music Week went to press, the situation meant that EUK was only able to get stock by paying upfront.

Given EUK is the UK's main distributor of music product, with a range of clients that includes Zavvi, Asda, Sainsbury's and the Woolworths chain itself, the turn of events is likely to have a significant effect on the music retail market just as the busiest three months of trading during the year begin.