After reaping positive financial gains from remerchandising its store format, the Virgin Entertainment Group North America is once again in expansion mode.

That's the word from VEGNA chairman Simon Wright, who presided over a three-year restructuring that saw the chain close 10 stores to get down to its current total of 13, and an inventory makeover that saw the chain diversify heavily beyond its CD base.

For the fiscal year ended March 31, the U.S. Virgin Megastore chain posted a 5.2% comparable-store gain and a 10% increase in the New York market. Wright says the chain will limit its new store search to the New York and Los
Angeles markets.

Music, which used to comprise as much as 75% of Virgin's sales, last year accounted for 48% of total sales, which Billboard estimates at $180 million.
As a closely-held company, Virgin doesn't have to release financial results, but a press release supplies some same-store gains for various product categories.

According to the release, Virgin Megastores saw significant sales increases in several departments, including a 40% increase in electronic sales and a 50% increase in apparel and merchandise, since this time last year. Also, DVDs chalked up a 21% comparable-store gain on a unit basis, while video games were up 20%.

For the year, movies accounted for 31% of revenue, games 6%, books 2%, and
electronics, apparel and other merchandise stood at 13%. The latter category
ranges from the low 5% it has in our Ontario, Calif.-store to the 20% it
generates in New York stores and 35% in Hollywood.

While VEGNA has been diversifying its product lines, music is still at the heart of its lifestyle offering, Wright says. "Analysts predicted that downloading would kill the music store shopping experience," Wright said in a statement. "We disagreed. We knew that customers still want a place to shop for music and be entertained, we just needed to expand our offer to include other areas of interest, such as more DVDs and games, to better meet their needs."