Virgin Entertainment Group North America will close two superstores and open one new specialty store.

The new store is a 3,000 square-foot specialty store at the Hollywood Bowl next month. At about the same time, VEGNA will close its Chicago and Salt Lake City stores.

According to VEG CEO Simon Wright, the Chicago store, which had an annual volume of $16 million, was never profitable due to high rent. In fact, the lease was to expire in 18 months and VEGNA probably would have been looking at even higher rent, so the chain was happy to jump at a chance to sell the lease to the Forever 21 clothing chain, Wright tells .biz.

Likewise, in Salt Lake City, the landlord exercised an option to terminate the current lease but would have allowed VEGNA to stay at a higher rent, which would have put the store into the red. So again, the chain decided to close.

But Wright emphasized that the company is still looking for new stores. In fact, he says, "We have entered into an arrangement with urban real estate developers to look at a number of different locations in New York and California.”

In a letter to suppliers, Wright says, "I know the question from everyone will be, are there any further store closures being planned. With the exception of issues around Sunset Boulevard where our lease terminates in January 2008 and where we are working with the landlord on new lease terms, we are not currently contemplating any further closures."