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Musicland to Expand Bricks and Clicks
Jim Milliot -- 4/24/00

Musicland's four main objectives for 2000 are to strengthen its e-commerce presence through increased investment, begin to develop Web-enabled store systems, remodel mall stores and expand superstores, and improve the profitability of its bricks-and-mortar outlets. To achieve its targets, Musicland has budgeted $60 million in capital expenditures for 2000, the company reported in its 10-k filing with the SEC.

Musicland will open six Media Play outlets in the year, including three stores in Pittsburgh, a new market for the company; the other new stores will be opened in existing markets. The company also plans to downsize some of its 47,000-sq.-ft. Media Play stores to the current prototype of 30,000- 40,000 sq. ft. Approximately 35 On Cue stores are scheduled to be opened in 2000, with new openings set for the Midwest, West Coast and Pacific Northwest.

Earlier this year, Musicland reported that sales in its superstore division rose 6.5% to $668.6 million in 1999 (News, Jan. 31). In its 10-k filing, the company noted that while music remains its largest product segment, sales of books and other entertainment products rose 13% to $396.6 million last year. Musicland's Media Play and On Cue stores now carry up to 45,000 and 8,500 titles, respectively. The company also noted that revenues from its e-commerce operations, launched last June, were "not significant" in 2000--$1.4 million. The company is looking for a better performance from its Web sites this year; it reported that it participated in a limited test of digital delivery of music in 1999 and is prepared to offer music downloading on its e-commerce sites as demand develops.

For the first quarter, revenues in the superstore division rose 6%, to $152.1 million, with comparable-store sales ahead 1.2%. Musicland also reported that e-commerce revenues in the quarter were $1.9 million.

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