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Valley Shaving Sellthrough Accounts

5 Oct, 2001 By: Thomas K. Arnold

Valley Media has begun paring down its video sellthrough business, cutting out accounts with which the company is seeing little profit.

“We are realigning our video business,” says c.e.o. Peter Berger. “For us, some aspects of the video business lack compatibility with our structure. We started [this process] last April, when we exited video rental, and we're continuing to go through the process of defining overall Valley business as it relates to video and audio together.”

Conceding that “money is very dear to us,” Berger says his staff is notifying a number of accounts, some of them in the food and drug sector, that it will no longer service them with VHS and DVD sellthrough product. New release shipments to these accounts ended Oct. 2 with The Mummy Returns, but catalog shipments will continue for an unspecified period of time.

“We will continue to provide them with product until we can help transition them to a new supplier,” Berger says.Berger won't say how many accounts are affected, but sources say the list includes several prominent regional chains, including Stop N Shop, Giant Foods, Tops, Pathmark, Kohl's and Big Y.Berger will only say, “We've got video accounts where the margins are not much and the returns are unacceptable and it doesn't make sense for us to continue.”

He says the company ultimately intends to streamline video sellthrough distribution to audio, video and audio-video combo accounts.

“We want to focus on our key business,” he says.

Valley, based in Woodland, Calif., was a top wholesaler of audio CDs and cassettes when it entered the video business in 1997 with the purchase of Star Video. Within a year, Valley had closed five video branches and laid off an unspecified number of staffers. The company's video operations, which Berger now concedes were never successfully “integrated,” continued to bleed red ink, culminating in a whopping $29.5 million loss for the fiscal year that ended March 31, 2001. Last April, Valley announced it was exiting the video rental business to concentrate on audio and video sellthrough. In subsequent months, Valley's stock dipped below $1 and the company barely escaped Nasdaq delisting.

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