Life Support: How Long Until They Pull the Plug on Guitar Center?

SubscribeTTKsYTChannel

 

Marc Johnson for TheToneKing.com

 

 

From all sides, it looks like Guitar Center may be in a slow spiral into oblivion. That sounds harsh, but things aren’t going well for the company and haven’t been for years. Moody’s downgraded them…again. S&P Downgraded them…again. They haven’t posted a net profit in several years. They’re getting screwed in loan interest. And, to top it all off, rumors are circulating that manufacturers are getting antsy with GC’s poor performance.

 

 

A bit of history is in order.

Guitar Center was founded in California in 1959 by a dude named Wayne Mitchell. Originally an organ dealer named The Organ Center, they started finding more money in Vox guitars and amps. Changing their name to The Vox Center in 1964. The name didn’t last too long, and by 1970, Mitchell finally changed the name to Guitar Center.

But the big story behind GC is the name Larry Thomas. Starting out as a salesman in 1977 in the San Francisco store, Larry made his way up to CEO and President in less than 20 years. After taking over in 1991, Larry was the guy who made GC “The largest music retailer in the world.

It’s a great American story. A young man starts off at the bottom of the ladder, works his way up, and ushers his company into greatness.

If only it had stopped there.

On June 27, 2007 GC was bought out by Bain Capital for $1.9 billion plus assumed debt. With the debt, Bain had written a $2.1 billion dollar check for Guitar Center and all of its subsidiaries.

For those who don’t know, Bain Capital is a private equity and venture capital group that was founded in 1984 by current presidential nominee Mitt Romney. Basically, Bain buys companies, restructures them, and then sells them off at a profit. There are some success stories, and some no-so-success stories.

Unfortunately, when it came to Guitar Center, Bain hasn’t had much luck. One of the common complaints among GC employees after the restructuring involves their compensation. It’s hard to believe, but Guitar Center used to offer comprehensive pension and benefit plans. It’s the usual story. Outsource IT to India, freeze raises for years, increase management but cutting back on sales personnel by making them part-time, making it difficult to keep the floor covered.

And being hit by a recession right after the buy out didn’t help matters any.

 

Where are we now?

The Roadie Rag - An EZer way to clean your instruments!

Guitar Center is more than 1.6 billion dollars in debt. I’ll say that again so that you can fully grasp what I’m saying. Guitar Center owes 1,600,000,000.00 dollars to other people. As of March of last year, they had been on their knees begging to get a 2.5 year extension on $650 million of that total debt load. For an extension to April 2017, GC agreed to a 9.9% total interest rate.

An interest rate of 9.9% means that GC needs to pay back $64,350,000 dollars in interest on that $650 million dollar loan. And that’s only one loan! They have another for $622 million that they’re asking for an 18-month deferment on 50% of the interest payments. Who knows what the interest is on that bastard.

Even though GC murdered its competition by having over $2 billion in sales in 2011 – Doubling Sam Ash’s sales at the no. 2 spot – they still don’t have enough cash flow to cover even the interest in its debts. Which is explained in the Moody’s downgrade.

So, how does the world’s top seller of music gear end up not making enough money to cover their debt?

First, you need to know that that $2 billion figure is not just GC’s brick and mortar stores. That figure includes Musician’s Friend, Harmony Central, Music and Arts, and all of their subsidiaries.

That $2 billion ain’t profit. To give you an idea of the costs of running the GC empire:  According to Moody’s, in May of 2011, Guitar Center’s earnings, before “interest, taxes, depreciation, and amortization,” was estimated at $170 million. Dropping down from $2 billion to $170 million is one hell of a kick to the head.

From here it gets a bit harder to follow.

You see, in the business world, earnings aren’t the same thing as profit. According to Guitar Center’s filings for 2011, their Gross Profit is about 30% of their total sales or $60 million. “Interest, taxes, depreciation, and amortization” must be damn expensive if it took them from $170 million to $60 million.

To add to the cluster-frak sundae that is Guitar Center’s finances, according to their 2011 filings, Guitar Center had a Net loss of 7.4% or $111 million. My guess is that number includes payments on taxes and loan interest. Either way, if GC continues working with a Net loss of $111 million with a $1.6 billion dollar debt load, they might as well put their heads between their legs and kiss their ass goodbye.

Recently Moody’s has downgraded Guitar Center’s liquidity rating to Speculative Liquidity Grade – 3. Basically, it means that GC doesn’t have enough money to cover its interest expenses. On top of that, Moody’s is pretty sure that GC’s performance won’t improve over the next 12 months.

 

What’s going to happen now?

Well, that’s a tough question to answer. There are too many companies that have their hats in the ring to let Guitar Center go into bankruptcy so easily. Also, manufacturers are getting pissed at GC. Most of that mounting debt is probably due to them for product. And Guitar Center has been telling a lot of the manufacturers to piss off. But, most of these manufactures can’t simply jump ship. They sell too much of their stuff through GC. Most of them are probably just sitting quietly and trying to ride out the storm. But if things get much worse, don’t be surprised if you seen big brands pulling their lines.

Guitar Center’s reaction seems to be to get further into debt by opening more brick and mortar stores. They’re trying to make themselves look pretty, like nothing’s wrong. “Don’t worry. We’re expanding. Everything’s great.” All the while, they’re only burying themselves deeper under a mountain of debt.

Much of Guitar Center’s debt is coming due in April of 2013, which is not that far away. I guess we’ll just have to see what happens then. I would be surprised if Guitar Center didn’t go down. But if there are enough people who are willing to throw money at them, then I guess they’ll stay in business. If they do go down, I just hope they don’t take the rest of us with them.

FOG 960x150

 

Tiny URL for this post:
 

Related posts:

SubscribeTTKsYTChannel

Filed Under: Commentary / EditorialsFeaturedNews

Tags:

About the Author: Marc published his first novel Becoming in 2010. It’s a kick-ass book with monsters and dreams and stuff, and you should buy it. Since then, he’s written thousands of articles for TheToneKing.com, many of which have been picked up for circulation by manufacturers and other news outlets. His next book, Drugs and Pancakes, should be available early 2014 if his alcoholic editor can find time to work on it in-between destroying his liver and screaming about punctuation. He graduated from Roosevelt University with honors, which means that he’s not as dumb as he looks. He’s been playing guitar for over 25 years, which is almost twice as long as most of his students have been alive.

RSSComments (60)

Leave a Reply | Trackback URL

  1. […] Gibson will not make it past 90 days from now. Life Support: How Long Until They Pull the Plug on Guitar Center? | The Tone King | TheToneKing.com Aka Bain Capital bought Guitar Center. S&P and Moody's both downgraded GC's liquidity rating […]

  2. Jim in Texas says:

    As to name brands – Gibson, Fender, etc. – GC mishandled their Gibson acoustic line so badly, Gibson pulled them. I’m an acoustic musician, bluegrass specifically. 10 years ago, you could go into my local GC looking for banjos (an experience much like going into a Chinese restaurant and ordering a hamburger) and there would be these sad, dusty, rusty, old strings out of tune 2, 3, and 5 thousand dollar Gibson Mastertones hanging on the wall. No one knew how to tune them or sell them. Today, the only time you’ll see a Gibson banjo in a GC is if they took it in used. I’m betting all the big American names are revisiting their GC policies.

  3. Jim in Texas says:

    After posting one of my own, and reading the other comments, I’ve been thinking about this. I wonder if it’s possible that even in a big metro area, music sales in general just can’t support the enormous costs of running a big box music store? I’d love to know what their average sale is. I interviewed with them years ago and found that a)the employees are mostly commission, with a small base salary (alhtough their benefits were good at the time), and that they make very little profit off the sales of instruments. The real money makers are accessories – guitar stands, tuners, music books, straps, strings – this stuff all gets marked up big. When I go into my local GC, mostly what I see are kids just hanging out playing the guitars. I see very few real customers. Then I look around at the enormous inventory on the walls, and the expensive building, and I wonder how many guitar stands they have to sell to make their rent.

  4. Jim in Texas says:

    Although I teach music mostly now, I attempted to set up a brick and mortar asoustic shop about 10 years ago, and pretty much found out that going up against the Goliath (a GC about 6 blocks from me) would be suicide. I tried an online store for a while, and didn’t do well against the bigs there, either (I did not know until reading this article that GC owned Musician’s Friend!)
    GC is the Home Depot of musician stores. I used to have this great little Ace Hardwore store near me that had every single little nut and bolt that I ever needed. They’re gone now, a victim of the Home Depot big box about a half mile away. HD is a great place to buy huge loads of big lumber, but try to find a single nut or screw there.
    My guess is that among other factors, the depersonalization of the shopping experience is a factor in GC’s downturn. The old mom and pop “string shop” always gave you personal attention. Going into my local GC and being greeted (or not greeted) by smug 20s somethings is not my idea of a great experience.
    I’m not sad to see this happen. Perhaps it will cause string shops and music stores to open up again. I’ll shop at them, but will only go into GC if I absolutely need something and can’t find it elsewhere. I think the only thing that’s kept them going as long as it has (I’m sure online sales are killing them) is the mom who wants to buy a cheap electric guitar for her son and doesn’t know there’s any place else to get one.

  5. Biggus Dickus says:

    GC/MF and all of it’s corporate umbrella cohorts have been targeting Mom and Pop stores for quite a while now, and it is time for them to eat their just dessert.

    I’ve been in this industry for quite some time, and have watched countless Mom and Pop stores go by the wayside because of GC’s business practices.

    No Gibson at the Mom and Pops you say??? Who do you think MADE Gibson, Fender, and all the other brands that they are today? The Mom and Pop, brick and mortar store. There was a time in the late 90’s where Gibson had a moment of rare clarity and in an ego match with Larry Thomas, pulled out of GC completely. Yes, that was a brief, shining moment, but it happened. Rickenbacker told GC to ‘eff of as well, and still to this day, much to John Hall’s credit, the brand is still not in GC.

    If any of the people reading this would like to truly make a difference in the their local economy, and the US economy at large, they’d do the same as Rickenbacker and tell GC to go to hell, and start supporting the few Mom and Pop, brick and mortar stores left in the USA.

  6. Kathy H says:

    I once worked for Music and Arts, owned by Guitar Center. I LOVED my job at the time, was a manager in training full time, benefits and all that. Then one day I decided to go back to teaching, gave my store manager 2 week notice and he was all fine with that. a week or so before I was leaving I was given 5 minutes notice that they were letting me go, bullshit reasons (from the district manager). Well, I went menopausal on their asses and threatened to sue so to settle they let me have my unemployment of $7,000. It was all a very bad dream. I still like to shop there because there aren’t any other music stores. Even Daddy’s Junky is gone. RIP Guitar center, your days are numbered!

  7. greg says:

    I can’t think of a better business to go out of business. They have ran countless small retailers and manufacturers into the ground. Now it’s their turn. Unfortunately, some entity will buy the ‘Guitar Center’ name is continue the legacy of BS. Karma.

  8. S Caron says:

    This story might explain my disappointing visit to GC in FLL. I was on vacation in the US very recently, and I convinced my girlfriend to go take a stroll at the nearest GC, promoting the activity as an opportunity to see a giant US style guitar store. I did thought I was going to guitar heaven with an oppotunity to see live any gear that might come to mind.
    But 30 sec in to the store, I realized that my expectations were all too high, and that I would’nt experience the pilgrimage I was fantasizing about. Inventory was unimpressive, lacking lots of brands and models, espcially in amps. And the staff, although very polite, felt nervous and eager to sell sell sell. My girlfriend kind of sum it up for me by saying: “I can see that all guitar sales rep are but the same all over the world: uninterested, a bit arrogant and way to aggressive to make a sale.” I guess now I know why…

    Anyways, good luck with all this…

  9. […] Life Support: How Long Until They Pull the Plug on Guitar Center? | The Tone King | TheToneKing.com A little bit of older news about GC that I am not sure everyone has read….I would think long and hard about doing business with them until after April….although I would still buy that LE Blue/gold HH4 if the tools would ship it up here…. I feel for companies like EB that must have a lot of exposure with the clowns at GC…. Reply With Quote […]

  10. Space Norman says:

    Yet another example of “beancounters” running a business into the ground. Sure the financial aspects of the business are critical – but only if there’s a client base that supports it because of the quality of service and perceived value of doing business with a company. Guitar Center jumped the shark in terms of customer service years ago. It’s no longer a destination for many musicians because they’ve long since stopped stocking the “good” stuff. Sure … wanna buy cheap keyboard, a toy “X” stand, some low end guitars … GC is your baby. Looking for real gear – talk to Sweetwater. Sure, they’re a little pricy – but they have great pre-sales service, excellent order processing and delivery – and fantastic service after the sale. I’ll happily pay a little extra for the service that kind of service. GC and their army of accountants are simply in the middle of a long walk off a short pier.

  11. Steve Vaughan says:

    I used to work at a GC in Tucson AZ. I was a customer and then a sales guy. This was 6 years ago before the buyout. Yes, the horror stories are all true. Since I was in accessories, we were treated differently than the guitar / amp sales guys. Many of them got reamed when they didn’t meet quota and also with the threat of being fired. This is all true. Heard it straight from the horse’s mouth.

    Our store was overstaffed for our department and so it was a shark attack on customers. The only good thing was getting an employee discount. There were bad rumors before Bain bought out the chain and that’s when I quit. Best thing I ever did. It’s much better on the customer side of the counter.

    About deals, back then before the buyout, you could make a resonable offer on gear and get it accecpted. Now a days, they price it pretty fair, usually lower than eBay. My biggest bitch is how customers get screwed on street buys. We were told to tell the customer that if they come into the store the next day and see their gear they sold us, it will be at 100% mark-up. I guess that’s the only way they can make money, but people got screwed on selling lower priced gear. Even the name brand gear got you screwed. A mexi-Strat or Epi Les Paul in very nice shape = $150. Yep. You got screwed. Better to sell it on C’s list, but many didn’t have the time to wait.

    Currently, I buy 60% of my GC gear online the rest in store. That’s where the serious discounts are. But you’ve got to jump on it that second or someone else will beat you to it. I’ve bought amp heads, stomp boxes and guitars through GC used online. After doing my YouTube and internet research, I pull the trigger and buy. The only reason I do that is because you get a 30 day return policy. Beside finded a screaming deal, the return policy caps it and I buy from them.

    If GC goes out of business, where will you get a decent price on used gear? Craigslist is hit and miss and people there always want what they paid for it and nothing less. If Bain dumps GC, I hope Ernie Ball or someone else picks them up. I’ve encountered some scumbag sales people and managers at GC, but 85% of them have been stellar to me and I’ve sent in emails because me being an internet buyer got treated like gold. Upper management needs to know about that. The scumbags I just brush off and not buy from their store again.

  12. Greg says:

    Good riddance. Worked for GC in a better paid position. Unethical is an understatement. I can’t speak for all of the locations but the one I was at, treated employees miserably. The problem is the management from the top to the bottom is pretty rotten. The customer always loses. But so do the employees. They have a serious issue with rampant “cronyism”. It’s like an office gig with guys who are still trying to be “too cool”. It’s really sad. But worst of all, it is a complete waste of time for most employees and customers. They have no sense of pride in what they do. They do have a sense of pride on “getting over” on other people though. In the end, that’s why this company will bomb. I had it good, and I resigned. That’s how bad it was.

  13. Steve says:

    They need to go. If you treat your employees like crap and change the in-store culture that grew the business in the first place, you’re going to go out of business. If they go, other music companies who treat their employees and clients better will have more room to grow. I met my best friend and band mate 12 years later at Guitar Center. This is because you used to be encouraged to try the instruments. This would never happen today because they don’t want you to try the instruments unless you are prospected as a possible buyer. Therefore, I don’t buy there. As if I’m too stupid to realize that Guitar Center is just penny pinching at he cost of their brand and reputation…

  14. JeffS says:

    Line 6 has Board-Of-Directors from Avid. These BODs tossed out all the long time devoted employees that built the company, and brought in ex-Avid employees (see public info on their website and Linked-In). Line 6 is terrible now as a result of these Avid people. Line 6 also depends HEAVILY on GC sales.. my opinion is Line 6 will collapse shortly.

  15. signjay says:

    I have known four people that have been sales staff for GC, and three who have been instructors AND sales staff simultaneously. They got paid crap, and were fired if they were the low man on the sales totem pole, one guy got walked out the door only seconds after completing a sale on Christmas Eve Day. If students cancelled, the teacher still had to pay the store a third of the hourly rate. The teachers were constantly pressured to spend part of their lesson trying to pitch merchandise in the store instead of teach. These employees got no benefits, despite some of them working more than 40 hours a week, but were considered part time because they worked the floor 20hrs and taught 24 hrs. This place deserves no tears. It’s a model that deserves to die. Good Riddance.

  16. Bob says:

    No source is needed, just read the last 10Q filing and you can see just about everything in this post is true.

    http://google.brand.edgar-online.com/DisplayFiling.aspx?TabIndex=2&FilingID=8910808&companyid=9528&ppu=%252fdefault.aspx%253fcompanyid%253d9528

    “We believe that the asset-based revolving credit facility, our cash on hand and funds generated from operations will be adequate to fund debt service requirements, capital expenditures and working capital requirements for the next 12 months. Over the longer term, we expect that operating cash flows from our existing businesses will continue to be adequate to fund capital expenditures and working capital requirements.”

    Notice that the long term statement doesn’t include debt service requirements. They are telling you with this statement that they are going to default on atleast a portion of the debt.

  17. rockabetty says:

    GC has the most irritating sales team, one day they hang on you like your shoplifting and the next you cant get one to look you in the eye! my old man has been playing guitar for over 40 years and I play mandolin, bass and banjo and we shop quite often at gc, but I dont like going there, the manager is arrogant, ignorant and knows nothing about what he is selling yet treats us like we are the morons. They never have what we want in stock, the staff is clueless and even though the prices are ok they are not worth the two hour trip from our home to put up with them so I order most of our stuff online. We do however go in and look around if we are in the city, just for the fun of it, but we normally dont buy more than pics or the odd magazine or two.. I liked the mom and pop store we used to have within 20 minutes of the house, they did not have alot but they did have personality and a commitment to take care of their customers to the best of their ability and if they did not know something about what you wanted they obtained a detailed knowledge and got back to you.. I say good riddance gc I hope it helps bring back moom and pops all over the country, now if we could just get rid of walmart this country might turn back around :)

  18. Mike Dolbow says:

    I have been dealing with Guitar Center for year and love the place. I have a repair shop in Escondido and they have been sending me a lot of clients. It is a great place and really good equipment for a low low price.

    I really hope they pull out of it. Instead of doing all of this negative reporting how about trying to lift the place up a little bit.

    If your a musician please help support this place….

    Thanks

  19. Raven Storm says:

    I worked for GC a couple times. The first being when they took over Musician’s Friend, where I worked… and then last year. I got fired because I didn’t put up the profit numbers as a salesman… but I was the one constantly cleaning, restringing, and setting up guitars, merchandising, and basically actually WORKING while other salespeople stood around the front door waiting to jump on the next customer like a vulture. I won’t shed a tear if they go under… they’re responsible for nearly every mom and pop music store that has gone out of business because the smaller stores can’t buy as much merchandise at such a low cost. That’s why they don’t have as good of a selection as GC. It’s a monopoly, and I’ll celebrate when they go under.

  20. Linda Music Lee says:

    I personally have done quite a bit of busicness with them. bought a guitar, PA gear, drums accessories, etc.. my only they met an advertized price for me and lost $6 in my favor and I appreciate that!
    My only complaint is when I bought a used item I diddn’t realize tehre was such a ;long waiting period and when it was up I was told it wasn’t cleared yet…no communication…adn I did make the tript o the store 3 times for same item, but it was a fair deal so worth the wait. I like having a large store to look at different brands, compare sounds, structural integrity , etc..so I apprecaite them more than the ma and pops who stock only the tried and true..and not newq possibilities. As for job conditions, I have always been self employed so I have no real opinion about benefit packages as I’vbe never had one or a pension…so that’s all I can offer. I hope they stay around . it’s a fun outiong adn the only store I can get my Drummer boyfriend( besides American Music) to spend time shopping wqith me and if I’m lucky , he’ll take th4e hints and I’ll be “surprised ” down the road.

  21. Robert Arthur says:

    Mom and POP stores usually don’t have Gibson. That’s where GC comes in. If you go to the local mom and POp’s, all you see is chinese junk and a few Mexican Fenders. Do they have problems ? Yes. Is it a rip off? Only if you let the money leave your hands. I frankly don’t know why anyone would try a guitar, and then buy it unless they were happy with it AND the deal…

  22. […] center money woes… Life Support: How Long Until They Pull the Plug on Guitar Center? : The Tone King | TheToneKing.com . __________________ 'The best slave is one who does not know he is a […]

  23. Jeff says:

    Hey, Instead of just bitchin about it, why don’t we all figure out a way to fix it?? Yeah I don’t like the customer experience at guitar center either. They treat me like a dummy every time I go in several different stores, salespeople were very arrogant and not knowledgeable.
    By the way, I have been playing bass and guitar for 30 years. This store is becoming a Walmart Music, and they are pushing everyone to buy an instrument whether they can play or not. This is wrong.
    I hope the franchise can do well, but in the end… people are buying stuff from china for way cheaper.

  24. Robert Grose says:

    Guitar Center…good riddance…..salespeople suck, they won’t bargain at all, rip off people on their trades….when they have a decent sale, all the good vintage stuff gets hidden in the back….. good riddance….

  25. Tom E. says:

    Love the hatchet pieces on Bain Capital. Let me remind you that, were it not for Bain, GC and most probably Fender would have both folded years ago. Firms such as Bain do not become involved unless a company is already in poor financial shape as was the case with GC. The best thing that could happen now is for Bain to split the companies (GC, MF, Acoustic, Harbinger, etc.), fold the ones whose core businesses aren’t performing, and sell the assets of the better-performing companies to new investors whilst writing off the debt. In fact, I’d be surprised if this doesn’t happen in the next few months. GC may well yet survive (and Fender with it).

  26. Goldie Starr says:

    I owned a gear shop for years and hated GC for what they seemed to do to shops like mine – luckily, I was far enough out of the way (with respect to what customer demographic, therefore, products I offered as well as geographically) that the nearest GC didn’t really put the pinch on me. One thing I do want to note is that, when our local GC was first coming, representatives from the company sent buyers out to local “ma & pa shops” like mine and offered to buy us out – checkbooks in-hand, promising that it may be in our best interest to sell while we could. Didn’t care much for that. A few shops took the “buyout” and I told them “good luck.”

    Several years later, I ended up selling my business to a long-time friend and moved out-of-state. Again, I never felt the “hurt” when GC came around; we coexisted without conflict. The new city I live in has a GC as well and I’ve actually developed a close relationship with the manager and get anything I want at his cost. Now, I’m neither a fan nor foe of GC the company. I see my local store as a valuable source for whatever gear I need. I do stop in to each of the many corner shops to see what they have now and again, but prices are prohibitively high compared to what I pay for everything (in addition to my connection at my local GC, I still have manufacturer / dealer perks with all of the companies whose wares I used to sell in my shop), so I generally walk in, chat and walk out.

    My guess is that everyone who is reading this has shopped or does shop at big box stores like GC. It’s all about convenience and NONE of us want to or can spend more money than we have to. Soap-boxing is a sport best left to fatwallets like Mitt Romney. Save your money and your self-righteousness.

  27. Daniel says:

    Another reason why I thought Romney was a total sleaze. He built his whole career on this model. The whole LBO market is so corrupt. Check out this Rolling Stone article about Romney’s past, eerily the same as the GC story: http://www.rollingstone.com/politics/news/greed-and-debt-the-true-story-of-mitt-romney-and-bain-capital-20120829

  28. Daniel says:

    I go to guitar center all of the time. One of their employees once told me that they get their pay docked if they don’t meet their sales quotas. That seems pretty unethical, but the worst part is that you can see how this influences most of their sales people to be a little pushy at times. I feel sorry for them, while at the same time feel annoyed as fuck.

  29. Buh-waahhh. I shed no tears for that company. Hopefully mom & pop shops will benefit. I know I’m going to keep my eye out for the “going out of biz” sale and drive the final nail in the coffin. Awful cust. service, awful prices.

  30. Kelvin Harris says:

    I honestly do not see this happening nor would I want to see more musicians losing their jobs. I respect everyones opinions but you don’t have to shop there. Complaining about them makes you look jaded. I shop wherever I’m at. Somedays I hit the hipster mom and pop shops and sometimes I hit the corporate places. Each places has pros and cons.

  31. Buzzy says:

    I had no idea of these financials! I’d hate to see them disappear like Mars Music did.

    It’s nice to know that pretty much anything I need for the studio is abut 10 miles from me.

    I do however plead guilty to “showrooming” recently but it was not by design. They had the pretty pricey monitors I was interested in but only one pair and they were damaged. Sales guy said they’d have to special order and it could take 10-14 days or even more. So I ordered from Sweetwater and even though they were showing limited quantities, the monitors shipped today 3 days after the initial order.

  32. K McKinney says:

    Guitar Center also has to pay Bain-Capital maintenance fees for the wonderful corporate leadership they provide. Bain lobs debt onto GC and skates with these fees. Its criminal. This video clip explains how they get away with it. http://www.fmfilm.com/what-is-private-equity/
    or
    http://www.youtube.com/watch?v=bO_8DzMNcyk
    Thanks Marc Johnson for the article.

  33. Chuck Munson says:

    My problem is that I want real gear that’s better than the low-end stuff that fills 75% of the floor space in a GC. I am also not interested in the stupidly-priced boutique gear for old guys who have the money to buy a replica of David Gilmour’s Strat.

    I recently wanted to get a 5 string bass. I narrowed it down online to an MTD, a Schecter and an Ibanez. No GC in the Los Angeles area (or for that matter, in California!) had all (or even ANY) of these to try out. Neither did any other store (I called around).

    I had to order the instruments from GC.com, try them out and return the two out of three I didn’t want. How is this a good business plan?

  34. Steve Smith says:

    We were just talking about this at our studio, we work with several high profile brands, some of which have an inside scoop on the issue. Bain Capital AKA The Evil Empire has owned GC for nearly 5 years and they typically do not keep non-performing assets longer than 5 years. GC has been hemorrhaging cash for years now which include fun activities like buying and shutting down West LA Music or buying brands like Acoustic, Sterling, Harbinger, etc. to try to get higher margins. Then, they tried to go on a path to roll up rehearsal, recording and lessons under one roof. Problem with that is, any pro player or aspiring pro will just not feel “cool” rehearsing at GC. Meanwhile they get hit hard by show rooming, where people come and try things out then just pop on Amazon and get them for less without having to deal with an idiot salesman who will try to sell you an extended warranty on a guitar pick. There is a rumor that Ernie Ball might try to buy GC. Whatever happens, they remain one of the best distribution platforms. They have lost their way and need someone to come in with a fresh vision that is more streamlined, focused and modern.

    For me, I can almost always get the best price from GC because I buy regularly and have a relationship with the manager. In 98% of cases, they can be less expensive then buying from a distributor like Kaman Music. Because of that, I would hate to see them go.

    And a shout out to those who pointed out the dangers of credit line debt. 9.9% on billions? That’s crazy. That’s federal government crazy. If everyone in the entire world had a shovel and worked together, they couldn’t dig out from under that weight.

    Great article!

  35. Paul says:

    Great article, thanks for your hard work. This situation feels just like Mar’s did in the 90’s…except things are economically much worse now. There are several great articles out now about Fender’s predicament and how that ties in with GC. Thanks again.

  36. John says:

    They stink. Alto music is one of if not the best music store I have ever been to. I am a gutiarist and every time I go there, they always have the gear I am looking for or inquiring about.

  37. bombastic says:

    they need to close. period.

  38. hagg says:

    Hey Mark, try “Trading Musician” in Seattle. I don’t live there anymore but it was my favorite place to buy in Seattle. The staff is very knowledgeable and friendly and they have a pretty big store with a wide variety of stuff. Sorry this is a bit off topic but I could kind of understand where you coming from until you mentioned the Guitar Center in Seattle. Trading Musician always has stuff coming in out.

  39. Great information, are you or any of your team listed on linkedin so I can share this within the business format on linkedin ?

    Thanks and keep up the great investigating, I know that sooner or later they will go the way of MARS music and independents will thrive but again !

  40. Cornbred says:

    2 words Sweetwater

  41. Ozone Ferd says:

    Screw GC. I quit buying major items from them when they quit dealing. Used to go in there and get deals ie. a $99 SM57 for $75, or a mic stand thrown in with a mic purchase. Now they say they can’t deal, “corporate policy”. So I buy online and only use GC for cables, picks, quick items needed for gigs and to try things out. And as others have said, the staff is 90% clueless and could care less you are there. When I do go in there now all I see is parents with their kids wanting to be the next rock god and GC staff pushing some crappy guitar and amp on them.

  42. Mark says:

    Losing Guitar Center would be bad. We really don’t like going to mom and pop guitar stores that only have items that haven’t sold and it is a pain to try any guitar with some employee watching you like a hawk.
    Guitar centers around Seattle have been great and we went to one in Anaheim that the manager insisted we take our time even though the store was just about to close.
    The numbers prove that big box stores with lots of current selection are what is wanted but looks like some members of the Guitar Center board are incompetent.
    Another big box store will move in quickly to fill the void…

  43. Warped says:

    If this info is true then it’s only a matter of time for GC. As usual they will leave a gaping hole in the market where they used to be. It’s the same story with big box stores in general. They come on the scene, everyone flocks to them while ignoring mom and pop shops then a couple decades later bitch and moan because customer service sucks. We do it to ourselves.

  44. Boone says:

    Good. The Guitar Center in Tallahassee, FL sucks. I have been in there 3 times, and couldn’t get waited on. There were no other customers, and all the employees were either playing guitars or talking with each other. Two times I was ready to buy a new guitar, too. Ended up buying them on-line.

  45. Tony says:

    I buy everything online nowadays, and my usual Guitar Center experience is less than stellar… in fact, it usually sucks.

    Oh, and let this be a lesson to the kiddies – and the adults who still don’t seem to ‘get it’ – DEBT KILLS. If you can’t buy it with cash, you don’t need it. If I buy a guitar with cash, how many guitars do I pay for? ONE. Now, how much would I pay if I used credit to buy it?

    THE CREDIT/LOAN BUSINESS IS WHAT IS ENSLAVING MODERN SOCIETY… AND IT IS THE REASON WHY OUR COUNTRY(the USA) IS RAPIDLY DISINTEGRATING.

  46. Tom Harrison says:

    If Guitar Center fails in the Albany are, musicians are going to be hard hit. There would only be 2 good shops in all of the Albany NY, Schenectady NY, Troy NY areas. The two shops do not carry anywhere near the brands and large selection that GS offers. I to believe that there is to much at stake to let GC fail and go into bankruptcy. The music instrument manufacturers do not want to see a chain of that size go down because I am sure that their profits would take a hit. I for one do not care for ordering guitars, and amps online. I want to touch and feel what I am going to lay down my hard earned money. Maybe the manufacturers and GC can get together and work on making prices more attractive, and maybe GC should not have discount coupons that restrict using them on a large number of products they sell. Nothing burns me more than to want to purchase something and being told that the item is not eligible for that discount. Also bring more knowledgeable employees there. I was in there on a saturday night looking for a acoustic guitar. The only sales person told me that he knew nothing about acoustics and he could not help me. I went home without making a purchase. GC lost a sale that night, to bad for them.

  47. Steve Bartlett says:

    I recently went to the GC Web site and discovered that they have mixed their new gear along side their used equipment. For example, I clicked Bass Amps and went to the side where one could select the brand and chose Ampeg as I was looking for an SVT. What came up was not only Ampeg but various used Bass Amps aswell. I was rather confused because I never had that happen before. If one wanted used gear you simply clicked used gear and it would take you to that portion of the web-site. Why is this being done I wonder? I sense their in some big trouble!

  48. Chris says:

    I’m just curious to know what/who your sources are on this? It would have been great if you could cite them.

  49. Bob Whitham says:

    Yeah, I really think it is sad to see GC go down this way. But, when you cut the throats of your competition and then rape and pilage the manufacturers on their products, what do ya expect? I am really suprised that Fender and Gibson along with all of the other Prestige brands (ie, PRS, Marshall, and the such) haven’t pulled their lines from GC and company. Goes to show you that they are tied up in the mess and stand to lose a load of money and product. Shouldn’t have put all of their eggs in the GC basket. Should have worked with all the small independent shops and mom & pop stores. Then they would have had the diversification to withstand the GC Melt Down! I just have one thing more to say, even though I have bought stuff at GC, “Good Carma, and Good Ridance!”(Yes I know I spelt “Karma” wrong, Play on GC<LMAO).

  50. john acocella says:

    Guitar Centers are poping up all over the place in NY. There is nothing to buy in the stores. There are like 3 over priced drum sets, and one wall of crappy guitars. My question is who is buying all of these guitars. I haven’t been able to find many people to jam with that can actually play the things.

Leave a Reply

Current ye@r *

Spam Protection by WP-SpamFree

%d bloggers like this: