Guitar Center in Trouble

[multimutts]

Not sure if everyone has already seen this:

https://www.retaildive.com/news/guit...graded/512290/

A rating of CCC- has a description of: "Default imminent with little prospect for recovery"

(according to https://en.wikipedia.org/wiki/Bond_c...t_rating_tiers)

[Earl49]

Yup, been about two weeks -- give or take -- since this topic last popped up and ran its course here. Not criticizing, mutts, but it is a recurring topic of discussion every time some financial magazine or paper does a story, with just enough time in between so the thread drops to about page 4. Essentially the same story has been running for years.....

[Mr Fingers]

I thought this was the case previously; maybe they got some new capital but still can't operate profitably. Since most of the GC purchases that show up in posts are super discounts and "steals," it wouldn't be a surprise that they are struggling to churn enough volume to turn a profit. I don't want to see any business go down, but I always find myself making guitar purchases elsewhere than GC -- great, indy shops, or used via eBay and Craigslist.

[SMan]

They've struggled for a long time.

[Picker24]

I’ve been waiting years for this to happen..... I hate to see local music stores, even chains , disappearing. But Guitar Center had this coming. Perhaps other people had good experiences with GC, but I sure didn’t. Their customer service is beyond awful and don’t even try to cut a deal with them. I don’t know how they survived this long. I’m wondering how this will impact Musician’s Friend..... I’ve been noticing that MF is starting to go bad as well.

[Montesdad]

Originally Posted by Earl49

Yup, been about two weeks -- give or take -- since this topic last popped up and ran its course here. Not criticizing, mutts, but it is a recurring topic of discussion every time some financial magazine or paper does a story, with just enough time in between so the thread drops to about page 4. Essentially the same story has been running for years.....

I haven't seen any of the other posts, usually am on here daily, so I appreciate the note and observation.
Maybe just haven't looked in on those old posts.

I've a Guitar Center nearby here and there are several in the southland here -
considering how they're run and the staff they have to help, have wondered how they stay in business.
I've been in a few up in the LA area that seem to have good business and good staffing, others, not so much.

[SoCalSurf]

I just went into a local Guitar Center this morning and they have a depleted acoustic guitar section. I don't know if it was following some sort of sale or something, but they had VERY few guitars above entry-level models. They seem to have gone toward the < $500 variety.

[zombywoof]

You would need a warehouse to store all the rumors of the pending demise of CG.

[markm2553]

Good Friday looked to have been a good day for our GC.
They moved a lot of boxes over that weekend.

[rokdog49]

One of the leading factors if not THE leading factor is that electric guitar sales are and have been dropping. All gear related to electric guitars follows and because GC is so heavily invested in that segment, there is no easy way out.
The music culture and landscape has changed in many ways just in the last ten years. Despite optimism from some folks in the business, I think generally speaking, the guitar sales will continue to fall off and that includes acoustics though at a lesser rate. In my mind, the market just isn't going to be there. The boomers are in the rear view mirror and the bubble seems to have burst.
Hope I'm dreadfully wrong.

[Earl49]

I have a Guitar Center about three miles from my house, but I only go in there about once a year. And then usually because I am going past there anyway on my way to a mid-day meeting. Normally I prefer to visit my local independent music store, which is always a far more pleasant experience, with better stock and staff that actually knows something.

On the rare occasion I go into GC, I almost always know far more than the "sales clerks" and spend half of my time educating them. Trying any acoustic guitar is a challenge because there always seems to be some mini-concert happening in the acoustic room, or in the adjoining electric room where multiple amps are turned up to 11, shredding away. I cannot remember the last time I actually bought something there, even strings or picks. I have tried........

[Rip VanWinkle]

One thing to keep in mind is the collateral damage that could effect manufacturers if GC goes down. Gibson has been trying to stuff the retail channel with inventory for several years, but family businesses like Martin and Taylor depend on the inventory float as well. (Float being the amount of inventory that GC buys to display at the store level).

[justonwo]

Originally Posted by zombywoof

You would need a warehouse to store all the rumors of the pending demise of CG.

The cash required to finance the warehouse would make it difficult to service the rumor debt, which would edge those rumors closer to Chapter 11. Best not to warehouse them.

[DupleMeter]

If you read the MI trade magazines you get a more complete picture of the issue. Long story short, their loans mature in 2018 and they have little prospect of being able to pay the notes.

It will be interesting to see if they get an influx of cash from their investors (Bain Capital) or if they liquidate some or all of the stores to recoup what they can.

[DupleMeter]

For those in the Northeast, this is a similar scenario to what happened with Daddy's Junky Music. In that case the investors (I believe it was GE Capital) just closed all the stores to recoup whatever they could.