IS GC going out of business?

[handers]

Originally Posted by Turp

.

I'm waiting for Guitar Leasing

Ever see a lease car when it is turned in at end of lease?

No thx

Hans

[Catan]

Aw man, where am I going to test-drive acoustics for hours on end?

[mdutr0]

I find it interesting that Fender and Gibson have built up such a strong relationship with what must have been a sinking ship (or at least one with a major leak) for quite some time.

I suppose they must have done so due to the ubiquitousness of Guitar Center - we even have one in Mississippi (many chain stores/restaurants of other types that are common around the country are rare-to-nonexistent here).

I much prefer to buy guitars from mom and pops and from AGF sponsor dealers but I would still like to see GC hang around a while longer...

[Judson]

On Site Report:

I made it a point to go by the Raleigh, NC Guitar Center today ... the place was slammed! They had a room full of high-end Martins, Taylors, and Gibsons, including some custom shop Martins they got a couple of months ago. Even had a new Larrivee they had just stocked.

They may be going under, but it's not from lack of customer traffic. Or I could be mistaking tire kickers like me for customers. I just know that a lot of guitars that were in stock back in November are gone now and a lot of new ones are in their place.

Of course, all I bought was a couple of cables for $30 bucks, not sure who is actually buying the high dollar acoustics, but they seem to be moving them at a relatively brisk pace and the lower-end stuff is moving fast.

[Joseph Hanna]

Originally Posted by Blackville

On Site Report:

They may be going under, but it's not from lack of customer traffic.

Two things (on a fundamental level) are primary to the "ongoing and long term" health of a business. 1) Profit margin 2) cash flow. Having lot's of people milling about your business doesn't necessarily contribute to either.

[GHS]

Thanks for the feedback. When I was at my local GC at the begining of December, ( I have taken a liking to Takamine) three guitars went out of the acoustic room in my brief visit there. Two Taylors and one other Im not sure of. There was also a long register line of products of all types. So they appear to be selling, perhaps not a high enough profit level to keep going,yes?

[dkoloff]

The debt service on GC is a huge strain and there is a very good chance they will default on some obligations. If not out of business some serious restructuring will be in order for them to survive.

[Tony Burns]

Stores as a whole did not do as good as they though they would this Christmas - GC is a very big company with many outlets- they are hurting , but holding their own -- who im worried about are my local Mom and Pop stores , they are the lifeline for musicians in my neck of the woods -Im not a big GC person !

[Gizmot]

I have nothing bad to say about Guitar Center and I wish them nothing but success, but in my opinion they are well on their way to trouble. I learned years ago that your inventory is a physical manifestation of your P & L statement. Based on that alone, GC is in trouble! They used to carry a much larger inventory of everything and now, you're seeing a lot of space dedicated to used gear (not that there's anything wrong with that). Bottom line is that they're cutting inventory and they can't make enough sales at a high enough margin to cover their current obligations and the long-term debt.

Bain isn't a great operations company - just ask Mitt Romney

[BoneDigger]

I hope not! I sort of like going in a GC when I am around one just to see what they have used!

Todd

[Judson]

Yes, understood ... but as I said, many high-dollar guitars had been moved since before Christmas and new stock was in its place. I go by pretty often and I can tell when guitars get sold. But, maybe this particular GC is one of the more active and successful ones.

Originally Posted by Joseph Hanna

Two things (on a fundamental level) are primary to the "ongoing and long term" health of a business. 1) Profit margin 2) cash flow. Having lot's of people milling about your business doesn't necessarily contribute to either.

[zipster100]

GC's financial woes are a huge concern to bond holders and suppliers. The bond holders hedge their bets, they will be fine somehow. It's the suppliers who really need to worry because if GC goes so does their primary distribution channel. Take Martin for example, GC is their single largest customer. The rise in Martin's production number over the past 5 -7 years directly correlates to the expansion of GC. Same goes for Gibson and Fender. What complicates the demise of GC for these suppliers is that they dropped the majority of their long term dealers to supply GC.

[JRB]

A couple of thoughts.

1. The stores stock what sells. If your local store doesn't have a bunch of higher-end guitars in stock, it's because they don't sell in your area.
2. Used gear has a 100% margin. If you see a $100 used guitar, GC probably paid $50 for it. A used Les Paul that sold for $4K in my store? GC paid $2K for it. Used gear makes money.

[wthurman]

Originally Posted by Catan

Aw man, where am I going to test-drive acoustics for hours on end?

You mean you might have to be polite to those who walk in and would like to play but won't because you're hogging the space? Horrors!

[Ellington]

I was surprised to learn recently that GC owns Musician's Friend, although they don't generally seem to want to share that with the general public. They claim to "compete" with one another. The only reason I realized this is that they both offered the same "exclusive model" of the Gibson Hummingbird Pro.