RETAIL: A ZAVVI BUSINESS SENSE.

Since emerging from a management buyout of Virgin Megastores, Zavvi has proved doubters wrong by posting double-digit profits for its first 12 months. Music Week reports on a good year of trading

By Ben Cardew

THE LAUNCH OF ZAVVI, created from a management buyout at Virgin Megastores in September 2007, was, it is fair to say, greeted with some scepticism.

For a start there was the name, "a modern, independent take on the word `savvy'", according to CEO Simon Douglas who led the buyout, but destined to live in the formidable shadows of Virgin, long-established as one of the UK's premier brands.

Then there were the reports - condemned by Zavvi as "pure speculation" - that Sir Richard Branson had paid #57m into Virgin Megastores ahead of the MBO to create Zavvi, following a year in which the retailer lost #46.9m on an operating level.

In short, many in the industry were expecting a disaster. However, as the retailer blew out the candles on its first birthday cake, Douglas was in typically robust mood, having released figures that showed a 10.2% like-for-like increase in sales across its first year of trading.

"I am delighted," he tells Music Week. "The cynics said that we would only last until January 2008. We have outlasted the cynics. When we did the MBO we put the best plan together and we are on track with that."