Woolworths knocks Zavvi over

The fact that the administrators have been sent in today to store chain Zavvi – the old Virgin Megastore group – is yet more evidence that some people in business are going to be very busy over Christmas.
Finance directors and corporate recovery specialists will be engaged in a frantic race to rescue what they can from all sorts of companies in trouble.
Some of those businesses are in Notts, so don't be surprised to see the lights on in a few offices in the city over Christmas
This is traditionally a crunch point in the annual business cycle for two reasons.
One is that this week marks a quarter day, the property industry's term for the period when businesses that lease their premises are due to pay their landlord the next three months' rent.
If a business occupies a big shop or factory unit – and especially if they occupy a chain of them - it can be a pretty hefty chunk of money.
As you can imagine, scraping the cash together to pay that rent is going to be beyond some people right now.
If the business is a shop chain the chances are that the landlord and all its other creditors will want to let it trade through the January sales.
The cold, hard calculation is that the business will have sold most of its stock and will have the cash in from the sales. More cash and less stock makes a troubled business easier to liquidate.
So January may be the month when quite a few retail businesses go under.
In Zavvi's case, its problems have come early because they look like a direct consequence of the collapse of Woolworths. A Woolies subsidiary, wholesaler Entertainment UK, supplied most of the CDs and DVDs that Zavvi sold, and when it went into administration a few weeks ago Zavvi's supplies dried up.
It had to find new suppliers who, in the current trading environment, will have demanded more stringent payment terms for stock. It also had to pay its outstanding Entertainment UK debts to the administrators of Woolies.
The end result was a double whammy: falling sales because of lower stock but more cash going out of the business to settle a big bill and buy in new stuff.
Hence the appearance of the suits from Ernst and Young this morning. Not a happy Christmas.