Guitar Center goes bankrupt, idled by coronavirus and slower sales

[Zorro]

Guitar Center Inc., the largest U.S. retailer of music instruments and equipment, filed for bankruptcy after the spreading COVID-19 pandemic kept customers at home and job losses made them less able to afford new gear.

The filing in the Eastern District of Virginia gives the company a break on its debts by letting it stay in business as it seeks to carry out a restructuring plan. A turnaround will be complicated by the fact that the company’s stores were shut in mid-March to help stop the spread of the coronavirus outbreak. It has reopened certain locations while maintaining e-commerce operations.

A restructuring support agreement that Guitar Center announced Nov. 13 calls for new financing backed by existing creditors as well as $165 million in new equity investments from its private equity owner, Ares Management Corp., and Carlyle Group and Brigade Capital Management.

Guitar Center, based in Westlake Village, has around 300 stores across the U.S. Sister brands include Music & Arts, with more than 200 stores specializing in band and orchestral instruments for sale and rent.

https://www.latimes.com/business/story/2020-11-22/guitar-center-goes-bankrupt-coronavirus

[Shermann]

1. They've had flat sales and high debt for years nt

[underpants]

4. Yeah classic vulture situation

We had a friend who bailed out on them a few years ago.

[SlogginThroughIt]

2. Brick and mortar is just a place to test things before buying online

[Arthur_Frain]

11. Guitar Center: too big to fail?

What you say is true for most things in the store. Not stringed instruments, however. If all they sold was guitars, it’d be a much smaller store though.

[Indykatie]

3. How Does a Bankrupt Business Raise $165 Million in New Investment?

[redstateblues]

5. Ironic that this is happening as GC has really made it hard

on the local music stores here in Nashville

[TexasTowelie]

6. Terrible time to be in the music business

whether it is in retail or majoring in music in college. I noticed that some colleges have changed to virtual recitals as the capstone on their degrees, but with the restrictions on large gatherings the coronavirus is going to have an effect for years.

[Yonnie3]

7. Our gross is less than 5% of last year's

We do live Audio and Lighting for events/concerts.

[Midnight Writer]

18. My brother is an out of work musician. He gets offers, but he's not going to expose himself.

He plays mostly in bars and private parties. He says no way is he going to spend hours in a room full of drinkers in the middle of a pandemic.

[Autumn]

8. We drove by one here. Couple people were outside the door, hitting guitars with golf club

It really pissed me off.

[JustABozoOnThisBus]

14. Why were they hitting guitars with golf clubs?

Were they protesting something? Or some variation of a Jimmy Hendrix stage mayhem finale?

I like Guitar Center. They'll leave you alone in the acoustic guitar room while you try out things that are way beyond your budget. And then you work your way down to the affordable ones. (Which generally sound just as good).

[TheBlackAdder]

16. They were trying to save money and make their own Guitar Driver. 🤣

[Autumn]

17. No, they looked to be employees. They had new guitars sitting on

their sides swinging at them with golf clubs. We stopped and watched a minute, they destroyed three, what looked like guitars with price tags still on them, while we were watching.

[Towlie]

9. They'll probably concentrate on online ordering and shipping like Sweetwater.

 
?
 
https://www.sweetwater.com/

[ProfessorGAC]

13. They Already Own Musician's Friend

They have for years. Maybe 15?
We noticed it before we even got the info, because if GC had a guitar sharply discounted, so did MF. One might promote it on their front page, and the other just part of the menu. Happened in both directions.
Then the guitar department manager told us we could check for deals on line, before we drove 40 miles. Mentioned both GC & MF, and told us GC & MF were the same company.
Not sure how much pinch Sweetwater has given them since then.
Perhaps, like the geniuses that ruined Sears, they were too attentive to brick & mortar and got passed up with "catalog" sales.

[msongs]

10. shoulda been selling autotune devices... nt

[Eko]

12. Bankruptcy Protection, not Bankruptcy.

Huge difference.

[mopinko]

15. maybe it's time to spring for an ax.

got my eye on the clapton signature strat.
i'll watch out for sales.

i dont play. yet.

[Generic Brad]

19. Ironically, guitar maker Fender is having a record sales year

It is not lack of interest in musical instruments that is driving their demise. It is their business model and inability to adapt to economic trends.