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FDP Forum / Moe's Tavern (_8^(I) / This doesen't look good for GC.......

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henrycat
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Ch'town, PEI, Canada

He said he was a wit. He was half right.
Dec 8th, 2017 11:40 AM   Edit   Profile   Print Topic   Search Topic

Just had this pop up on my email....

News is not good for Guitar Center. The guitar music instrument big box retailer was just downgraded again by S&P deeper into junk bond status to CCC-. This designation basically means they have little or no prospect of making good on debts and default is "imminent". This is as low of a rating as a company can have and not actually be in default on debts.

[CORRECTION: downgrade was not on the 5th. It was last week. Also, according to Moody's website, they downgraded GC to Caa1 from B3, so that's even worse than reported.]

(This message was last edited by henrycat at 05:13 PM, Dec 8th, 2017)

Peegoo
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Roisin, I wanna

fight your father
Dec 8th, 2017 01:14 PM   Edit   Profile   Print Topic   Search Topic

Yeah, they've been in an unrecoverable dive for 5+ years now. Companies like MF and Sweetwater have killed 'em.

They'll liquidate what they can and then sell to some corporation--that can absorb their debts--for pennies on the dollar.

It's just a matter of time now before they're in a smoking hole in the ground.

Chris Greene
FDP Host

Idaho, USA

Nine mile skid on a ten mile ride
Dec 8th, 2017 01:16 PM   Edit   Profile   Print Topic   Search Topic

As one of our major sponsors you'd better hope for a better outcome.

MJB
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Who's we sucka?

Smith, Wesson and me.
Dec 8th, 2017 01:28 PM   Edit   Profile   Print Topic   Search Topic

Doesn't GC own MF?

JackL

Chico CA

If you rest, you rust.
Dec 8th, 2017 01:29 PM   Edit   Profile   Print Topic   Search Topic

I thought GC was owned by Musician's Friend? For some reason I thought that they were essentially the same company, one brick and mortar the other online.

As so often happens, I guess I was mistaken!

RKSTRAT
Contributing Member
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USA

"Clapton is Good"
Dec 8th, 2017 01:48 PM   Edit   Profile   Print Topic   Search Topic

I thought so too......but Peegoo is never wrong :-).

Hammond101
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So. Cal. USA

Dec 8th, 2017 01:49 PM   Edit   Profile   Print Topic   Search Topic

GC has been hurting for a long time. They seem to have alienated the pro player, working musician customer who was their base customer of years ago. There are no more days of going in and working "your deal" on gear. That seemed to be their success. The days of people on the sales floor who actually know something are over. All very young, poorly compensated men and women that may play guitar or drums but have a total lack of product knowledge. Inventories at our local SoCal stores are bad. Lots of entry level and mid grade instruments but very little in the high end electric market unless you want to call a $1900 Strat or Tele high end. No Gibson at some stores, only Epi.

Trying to survive in retail in an internet market is difficult unless you are a service business.

Gibson and Fender both are trying to manage high debt, a sign of the electric market and boomers tapping out.

Acoustic manufacturers of both mid and high end guitars seem to be doing well although I'm not to sure about Martin at present.

jhawkr
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Wichita, KS USA

It's all gravy from here on...
Dec 8th, 2017 02:01 PM   Edit   Profile   Print Topic   Search Topic

According to Wiki...


"Guitar Center's acquirement companies/subsidiaries incorporate Music & Arts, GuitarCenter.com, LMI, Giardinelli, Musician.com, Private Reserve Guitars, Woodwind and Brasswind, Music 123, and used to own Harmony Central until its April 2015 sale to Gibson."


Peegoo
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Roisin, I wanna

fight your father
Dec 8th, 2017 03:49 PM   Edit   Profile   Print Topic   Search Topic

Ares Management is the majority controlling agent of GC, MF, Music and Arts, etc. They've been there since mid-2014 when they took over from Bain Capital.

Even though GC and MF are subsidiary brands of the same company, they have two different business models--one of which is failing. MF isn't exactly killing it in the market either, but they are in a much better place than GC.

SS2

Alexandria, Virginia

Dec 8th, 2017 04:20 PM   Edit   Profile   Print Topic   Search Topic

"Lots of entry level and mid grade instruments"

A new GC opened close by... That's the impression I've gotten on a few visits there. Disappointed to a point I don't feel a desire to check in regularly... Saw a Ricky bass and was told they weren't supposed to have it, was a mistake they had an upper end of such. The acoustic room is void of any mid to upper end Martins... some P-lam models.

Does really appear to be entry level for this store... odd in a way, high $ area it's located in.

(This message was last edited by SS2 at 06:30 PM, Dec 8th, 2017)

Steve M
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USA

Dec 8th, 2017 04:22 PM   Edit   Profile   Print Topic   Search Topic

I find this interesting because it appears GC could fail and MF continue.

I hadn't thought of it like this before

Would a GC failure help local brick and mortar?

Would Fender and Gibson turn back to them with more realistic programs and terms?

digiboy

New York City

Dec 8th, 2017 04:25 PM   Edit   Profile   Print Topic   Search Topic

I always wondered about how MF could get away with not charging sales tax here if they are connected with GC which has many shops located in New York. I guess the 2 are legally isolated enough.

I could never understand why GC bothered to open that store in Times Square, Manhattan a couple of years ago. If it was located on Broadway or 7th ave with a big impressive store front, at least it would have some level of status as a flagship store. Instead it's tucked away, still in Times Square but practically hidden, on 44th street with a very small entrance that leads downstairs. I don't know how well they do there but the rent's gotta be sky high. They already have a store in Manhattan just a mile or 2 south on 14th Street that has much better exposure and is much easier to get to. I'll bet that Times Square shop has put a huge dent in their "business model."

littleuch
Contributing Member
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Florida

Pronounced "Klinkhammer"
Dec 8th, 2017 04:28 PM   Edit   Profile   Print Topic   Search Topic

I had a dyslexic moment there and thought something bad happened to the boss.

HenryJ
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Bogue Falaya River

is STILL dark and cold.
Dec 8th, 2017 04:36 PM   Edit   Profile   Print Topic   Search Topic

I few months ago I heard my niece (SIL's dau.) say that her workplace gets better service from a local mom-and-pop music store than from the GC in her town.

But I'm pulling for GC to make a turnaround. But, being brick and mortar...

Gene from Tampa
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Tampa, FL

Press On Irregardless
Dec 8th, 2017 04:37 PM   Edit   Profile   Print Topic   Search Topic

Here in Tampa GC has also cut back on high-end guitars. I bought my D-35 there a number of years ago and was comparing it to a D-28. They had a couple of Claptons and high end Taylors. Not so today. Mostly Mexi-Martins and Ovation and Yamaha. They do have an entire wall of Les Pauls but again Epi's mostly.

I will say though the sales staff seems to have a low turnover and they are knowledgeable and helpful. If you ask what's new that's good they know. Then again my last purchase there was for less than $100 - a Fly 3 amp. And I didn't see anything else flying out the door.

Hammond101
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So. Cal. USA

Dec 8th, 2017 04:57 PM   Edit   Profile   Print Topic   Search Topic

"Would Fender and Gibson turn back to them with more realistic programs and terms?"

I would bet they, GC, already get the best terms and pricing the manufactures have to offer. Honestly from a manufactures standpoint and both mfgs you mentioned above have their own financial issues, terms should be shortened as the revenue from the sale of an instrument sold to them with long dating terms will most likely be spent paying someone else's bill. Gibby may have already done this as they seem to be very scare in GC stores.

GC has admitted publicly to "cash flow" problems in the past. Basically this means they are robbing Peter to pay Paul and can't put the down payment on a free hotdog. Putting the money in a cookie jar for Gibson or Fender isn't in their business plan at the moment. Revenues are paying operating costs and not paying for the inventory and their source of capital on time. A possible solution would be a third party floor plan company who would check inventories and collect smaller amounts more regularly.

I'd have a hard time coming up a banking firm willing to accept that risk with them being in trouble. Ultimately it would be the retail customer paying for this service and with other firm then being better priced that would have to cut needed margins to stay competitive. A big catch 22.

With the name they have in the market, if they go down another holding company will most likely buy them for pennies on the dollar and they will be back in business or possibly never even have to close.

I was amazed at what they spent on store remodels just a couple years ago when they were already in trouble. Their stores look like pawn shops compared to a Sam Ash location.

I've been in wholesale distribution and manufacturing at the day job since '79. Much of this has involved doing business with retailers. I can walk into a store and with a quick look around tell how they are doing financially. They seem to have done very little right in the last 10-12 years and it is catching up with them.


Gene from Tampa
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Tampa, FL

Press On Irregardless
Dec 8th, 2017 05:06 PM   Edit   Profile   Print Topic   Search Topic

The note coming due is reported to be about 1.6 billion dollars. I roughly estimate they need to sell an Epi starter pack to every 12 year old in the world this holiday season to make a dent in it.

They are doomed. So anyone know what happens to the inventory? Maybe it gets sold to MF at firesale prices and then re-sold on-line at 'normal' prices?





rok-a-bill-e
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Nashville,USA

Clawhammer Rules!
Dec 8th, 2017 05:30 PM   Edit   Profile   Print Topic   Search Topic

You mean that providing a free showroom with hands-on demos for the online sellers is not profitable? Why, that would mean the end of retail as we know it.

Peegoo
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Roisin, I wanna

fight your father
Dec 8th, 2017 06:16 PM   Edit   Profile   Print Topic   Search Topic

Of course I hope they can recover and retain the brand. I never cheer when a business fails.

The small mom 'n' pop music stores in my area (DC and surrounding environs) all stay in business via providing lessons and instrument service/repair. The sales floor is not the money maker.

GC is trying to sell buggy whips in the age of the automobile. If you cannot evolve with the market, you're left on the side of the road as an also-ran.



BbendFender
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American Patriot

About as ordinary as you can get.
Dec 8th, 2017 06:32 PM   Edit   Profile   Print Topic   Search Topic

Our local GC is dead.

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FDP Forum / Moe's Tavern (_8^(I) / This doesen't look good for GC.......




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