EUK legacy looms large over frantic market

Suppliers burnt by EUK’s demise disagree over whether to feed Zavvi with Christmas stock that will help it pay off its huge debts.

MCV understands that some of the UK’s largest publishers have reclaimed stock from EUK administrator Deloitte and are now trading direct with individual Zavvi stores – after the retailer called emergency meetings to thrash out cash-payment terms.
Others are even trading stock on a limited basis with the retailer through third-party distributors.

However, some leading suppliers are fearful of putting too much stock into Zavvi after being stung by EUK’s collapse. Many have opted to leave units sitting in EUK warehouses – ignoring the option of dealing with Zavvi direct.

One huge publisher – in with a realistic chance of claiming the Christmas No.1 spot – told MCV: We’ve picked up all the stock we had left in EUK’s warehouses. Because they were paying cash for product in their last few weeks, most of it went into retail without touching the sides, thankfully.

We’re doing very limited trading with Zavvi. But they should be fine for Christmas. The industry has pumped so many new releases in over the last month or so, they won’t run out of titles to fill up the shelves.

The strife will come in January – when their ability to generate cash dries up.”
However, another publisher – with a flagship title that also has an outside bet on the Christmas top spot – told us:

We had an approach from Zavvi several weeks ago, but we’re not trading direct. Zavvi have got stock of titles we’ve sent out that should see them though Christmas. Certain branches are out of stock, but rather than getting my hands dirty, I’d prefer to stand back and see what happens.”

And the sales boss of one of the UK’s top ten publishers told MCV that he was even hopeful that EUK may continue trading to some degree with Zavvi – clearing the stock his firm still has sat in the fallen distributor’s warehouses.

He said: EUK still has a skeleton staff, despite laying off 700 people. [Deloitte] might yet give EUK the choice to buy the stock in their warehouse off us. If they do, I’d guess that Zavvi would be the main beneficiary – along with WH Smith and Sainsbury’s. The rest of EUK’s old partners seem to be more sorted.

I worry about other publishers, though. It all depends on the terms they had with EUK before they went under.”

A Zavvi spokesperson told MCV that the firm had enough capital to deal with all UK publishers direct and on cash terms over Christmas.