Not sure Virgin is the best example:http://www.nytimes.com/2009/01/15/nyregion/15virgin.html?em. While they are still claiming they were “very very profitable”, this seems a bit hard to believe. The claim that it’s because they “shifted to apparel” also seems like a long shot, as apparel is being hammered at the moment. In addition, the retail real estate market in NYC is softer than it has been in decades, which would refute their claim it is more profitable to rent the space out.
The article states: “It comprised 11 stores when it was acquired, but now will be down to just five, two of them in California. Virgin closed other stores late last year.”.
Not likely that it was “very, very profitable”. The fact that VNO (1/2 owner of VMS) is also paying 60% of its dividend in stock rather than cash doesn’t shore up this argument, either. You don’t close your flagship Times Square store willy nilly, after all …