-
It was recently reported that the Guitar Center is in financial difficulties and may be downgraded by rating agencies. It was a leveraged buyout by Mitt Romney. LBO's are when a listed company is bought with debt and delisted from the stock exchange. The debt imposes heavy funding costs on a company and can lead to financial strain at a time when the internet is stealing market share. I don't think it is the end of retails stores, because you need to play a guitar to know it is a right fit.
-
04-25-2017 04:40 PM
-
This is very old news and Romney's had nothing to do with it for a very long time (in fact, it was not Romney but his former company, Bain Capital that bought the company, six years after he had retired from Bain). Guitar Center has gone through a series of down grades over many years. Ares Management, their largest creditor took over a majority interest a few years ago and they've been limping along ever since.
-
GC is one of a number of musical instrument sales companies owned by a conglomerate. Ever notice that the ads are almost the same as Musician's Friend and Music123? Sam Ash and American Musical are not part of that group but a lot of others are so there's not as much competition as one would expect.
-
I seem to remember that Fender was a very large creditor and that they would suffer mightily if GC went under?
-
Yeah, the LBO really put a strain on that company. Apparently they're $1.6 billion in debt.
Aside from the buyout, though, it seems to me that they were pretty late to the party with regard to online sales, or was I just unaware of them for a long time?
-
Has anyone ever had a good experience at a GC store....? Maybe they don't serve the market like Sweetwater does every day.
-
I have noticed Guitar Center has been trying new things the last couple of years. A couple of them in my area have remodeled. I also noticed some that give lessons on guitar and maybe even other instruments. They have had great guitarists come by and demo new models of amp and guitar in a clinic-like setting. I even noticed a couple of years back that the salesman are not as specialized as they used to be. They float from department to department according to manning requirements. Some even have guitar repairmen that go beyond just set up and restringing.
Somebody in management was really trying to come up with fresh ideas to make them profitable. But its tough to win when the principles or supply and demand are not in your favor.
-
Pro Audio Land is another easy to work with alternative to the big guys. I've had pain free dealings with PAL for the past few years.
Originally Posted by boatheelmusic
Last edited by MaxTwang; 04-25-2017 at 09:39 PM.
-
GC (and their affiliates MF, etc), as the dominant retailer in the US market, are in a position to put some heavy terms on the brands that sell through GC & their affiliates. Local stores report GC have exclusivity agreements with some brands - local stores lost their dealerships (Gibson & Taylor are reported to be 2 big examples). Originally Posted by richpiv
If the stories of GC's massive debts to their suppliers are true then the price of that gear would include the cost of GC's debt - whether you buy through GC or not.Last edited by MaxTwang; 04-25-2017 at 09:40 PM.
-
When Fender tried to go public they had to open up all of their books. It was certainly true at that time that Fender had a massive delinquent (and unsecured) accounts receivable and much of it was owed by GC. That was one of the reasons that the IPO failed. Originally Posted by MaxTwang
Last edited by Jim Soloway; 04-26-2017 at 12:42 PM.
-
Yes, I have. Several times, too. Like many things in life, it depends on the individual you are dealing with. Originally Posted by boatheelmusic
-
Guitar Center has entered the rentals market, and rents out all sorts of gear. They offer studios for rehearsal and lessons, and most offer lessons on many instruments, including guitar, bass, drums, keyboards, and others.
I just bought an amp head from GC, and got a floor model that didn't work. I have no idea why it was shipped from a store in north Texas, but it was. I took it to my local GC, and they located one in stock at another store not far away, and in order to expedite the transaction, gave me a gift card for the amount of the purchase, which I took to the other store and used it to pay for the amp there. That store just swiped the card and asked if I wanted a bag for the head. I could have had it reshipped, or sent to the local store, whatever I preferred. I would have preferred a working unit in the first place, but the customer service was excellent after I took it back, and I can't really complain. I got another floor model, which looks new, and I'm fine with that. The alternative was getting a new one shipped from a distribution center, and I didn't want to wait. That was my choice.
-
I'm not saying it is not going to happen *this* time, but the repeated claims that GC is finally about to fail remind me of ...
-
Our Guitar Center in Wichita is doing a surprisingly good job. It's a smaller store, so the stock isn't very impressive, but there are a number of really nice people working there. I've made friends with one of the managers and very much enjoy doing trades there. Having a personal relationship makes a big difference. When it first opened up, I could hardly stand to walk in the door, but it has come along nicely. I think it is being run well. Originally Posted by boatheelmusic
I also love our few indy stores in town and give them plenty of business too.
But I can't diss on GC any longer.
-
Sounds like the Tucson stores ... Originally Posted by Longways to Go
they don't do that much high end stock ... there's a few nice Gibson, Fender, Martin, and Taylor guitars in there .... but most of the stock is mid to low end stuff ...
but they're nice folks and they keep busy
The ones in the Phoenix area do seem to have better stuff most of the time
I picked up my super nice Super 400 from a Houston GC last fall ... it was great to have it shipped to a GC in Tucson where the GC employees could witness any shipping damage (none fortunately!) rather than to my house where my word may not have held up in case of shipping damage ... and I am using their no interest for three years credit to pay for it .. so my money can sit in my savings and I have more time to sell a few guitars to pay it off
-
I understand why think this feels so much like some combination of Chicken Little and the Boy Who Cries Wolf, but the truth is that Guitar Center has already failed once. That's basically what happened in 2014 when majority ownership was taken over by Ares. That was the corporate equivalent of having your car repossessed or losing your house to the bank. Originally Posted by BigDaddyLoveHandles
-
The LBO is old news, but the possible downgrade to junk status is new to some of us anyway. Originally Posted by Jim Soloway
-
New to you perhaps but not really a new story. And it's not the LBO. That basically failed in 2014. It's the take over by their creditor that's driving the show. For several years before the Ares takeover, the interest rate they were being forced to pay on their new borrowing was about what you'd pay on credit card debt. I would assume the that the junk rating means is that the investor community suspects that Ares may at some foreseeable point consider pulling the plug or likely sell the assets in a fire sale. Originally Posted by vsaumarez
-
Is the debt all with suppliers? Receivables are probably a part of it, but I imagine the high gearing is due to the LBO, and any subsequent additional debt issued to pay increased funding costs. Funding costs can be passed onto customers, which may difficult to do in a highly competitive environment. Costs can also be helped by refinancing to extend maturities (might not be possible in a changing interest rate environment), and with interest rate swaps. Perhaps all of that has been tried, and the recent junk status warning means they're in the last chance bar. Originally Posted by MaxTwang
Whether you like the Guitar Center or not, LBOs are strongly associated with financial shenanigans. One reason they became so popular was banks would collateralize them, the same thing they did with mortgage debt in order to offload the risk from their books and pass it onto unsuspecting investors. I actually quite like the Guitar Center and would be sad to see it go as a result of predatory investors who deliberately over-leverage listed companies with a view to a quick exit and a fast buck. If the story is more that its business model is no longer sustainable that is different.
-
All three of the GC's near me (Hallandale, Coconut creek and West Palm beach) are staffed with cool folks, albeit a bit distant. They pretty much leave you alone to try what you want and are very helpful and knowledgeable. I have bought only a few gits there, all were priced fairly, I like going there whenever I can.
Those I know who buy there feel the same way I do, I think the brick and mortar stores take some heat they don't deserve.
-
I have never had a problem there. I will admit I have never bought a guitar there. However, I have spent plenty in the audio - live sound dept. I would never leave anything of value there. I would not leave a large credit on their books for any length of time.
There's a larger store near me. Everyone once in a while they do get some very nice used items that look very attractive from a price point of view. I assume the previous owner did not do well on the trade.Last edited by DanielleOM; 04-27-2017 at 08:59 AM.
-
I also keep an eye on the used stuff at GC. I got my Eastman T145 there, and some other items. I don't think I would seriously consider trading anything in, but I'll buy.
-
Boy did I learn the hard way about trading gear. Originally Posted by DanielleOM
I am making darn sure that I really want/need the guitars and amps that I buy because I don't like going through the hassle of selling them on my own and Guitar Center will only give you half of the ebay value of the item (At least this was true when last I checked).
-
In my cases dozens of good experieces over a couple decades and a number excellent experieces since they opened in Asheville in late 2015: two guitars, two amps, two mfx's, one boutique pedal, a digital portastudio, mic and dozens of odds and ends. Originally Posted by boatheelmusic
The store is staffed by great peple that I do not wish job loss to.
Unlike the "beloved" local shops, they are open evenings including Saturdays and have Sunday hours.
They have my business for life.
my avatar is the only selfie I ever took in my life. It was shot in the local GC.Last edited by Alder Statesman; 04-27-2017 at 12:33 PM.
-
I think each GC is specific to itself. They all seem different to me. I've purchased a few used guitars from them and had no problems. One common thread I see in GC stores is that they are not very flexible on price when it comes to used gear. So if you think it's a good deal, fine, if not the stores I've been in won't budge a dime and they'd rather you walk out the door than sell the gear at any discount and turn over the money to purchase more used gear. So, it sits on the wall, out of tune, out of intonation, beat strings, terrible action etc. and they seem to have no concept of "opportunity costs", IE: How much does it cost them to have that guitar hang on the wall for 6 months before it sells.
As far as selling to GC. LOL, well IMO that to depends on the specific store as well.
A number of years ago I had a '65 Gibson ES330 is very nice condition. I asked one of the salesman what they would give me for it. He said "about $700". I'm thinking that this &^*()* thinks I'm stupid and wants to take advantage of me because they had one hanging high on the wall, in far worse shape than mine, and wanted $2400 for it. About 1.5 yrs later I sold it for $3400.
A turn off from GC, MF, and other co.'s under the same umbrella is that they send out flyers that look like "Sale" flyers. In truth "some" of the content is on sale but quite a lot is the every day price you can get anywhere. Home Depot and Lowe's do the same thing. I've even seen sale prices that were the same as the regular price. LOL.
Then again, some small dealers are no different. I was looking at a Martin acoustic a few years back. I told the owner that I knew I could purchase the guitar for less than MAP and told him the price. He said, maybe but then you'll have to purchase a case as well. I said no, that includes the case. He thought I was just being a butt head and thought he was going to call my bluff. He literally said "Ok, show me the money". I pulled out a wad of cash I had saved and gathered from selling some other gear and I could see it in his face that he was thinking "Oh $#)& now I have to sell it to him at that price. He was so ticked off and didn't say a word except a begrudgingly uttered "Thank you" when i paid in cash. He didn't lose any money, he made a quick sale, never had me return for any issues, he was mad because he thought i was lying and wouldn't have to discount the guitar. The same dealer once told me "so go buy a guitar on eBay" once when I told him that his price was about 40% higher than the same "sold" guitars on ebay.
OK, sorry for the long rant. I don't rip anyone off when buying or selling but I am a good shopper and like to do my homework before I make a purchase. That's one of the reasons I love this site. There's so much knowledge to be shared about music, musicians, gear etc.
Thanks !
Reply With Quote
“Shearing style”
Today, 05:26 PM in Comping, Chords & Chord Progressions