Musicland Outsources Warehousing, Fulfillment

Deluxe Media Services also to handle returns processes for 950-plus retail outlets

Minneapolis — February 12, 2004 — Retailer Musicland Group has signed an agreement with Deluxe Media Services to provide warehousing, fulfillment and returns processing for more than 950 Sam Goody, Suncoast and Media Play stores across the country.

Musicland Vice Chairman Danny Yarbrough directed a senior-level executive team and retained Tompkins Associates, a leading supply chain consultancy, to evaluate the retailer's current distribution operations.

The team conducted an intensive, five-month search for a third-party logistics provider that would meet Musicland's service requirements today and in the future. Selection criteria included overall experience with retail distribution and fulfillment, competitive cost structure and flexibility to allow for innovative product expansion.

The selection of Deluxe was based on the company's specialization of direct-to-store distribution of entertainment products and expertise in understanding retail compliance issues associated with retail shipments. Deluxe's distribution center, located 30-minutes outside Chicago, in Pleasant Prairie, Wis., will be responsible for warehousing, fulfillment and processing returns for most product lines offered by Musicland's retail stores.

"Deluxe Media Services is a premier provider of distribution supply chain management with extensive experience with retail distribution and the ability to streamline the supply chain," Yarbrough said. "They provide us with cost savings, increased service to our retail locations and the ability to expand into new product categories, as well as service other strategic opportunities."

Musicland will transition its services by late June from its former distribution center in Franklin, Ind., which was retained by its previous owners as part of the company's sale to Sun Capital Partners last year.

"This is an important strategic step for Musicland, which strengthens our marketplace position by reducing operating costs while simultaneously offering opportunities for category expansion and future growth," said Eric Weisman, the retailer's CEO. "Vice Chairman Danny Yarbrough and his team are to be commended for finding a solution that gives us the flexibility and control in this essential aspect of our business."

Deluxe is a wholly owned subsidiary of the Rank Group, offering such services as customized packaging, time definite distribution and transportation, and returns processing. Tompkins Associates is an operations-focused supply chain consulting firm.

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