Well don't start lining up outside the doors at midnight yet. According that report they're not going out of business anytime soon. A boost in the economy may help but there's another issue that looms larger for all of these guys.
How many mail order and online retailers can the market support? These guys are virtual hardware stores of music gear. They're not boutique retailers. In addition to big ticket items like guitars, amps, keyboards and live and studio boards and speakers of numerous styles, colors and brands, they'll also sell you barrel tips for Tele and $3.00 patch cables.
They all sell virtually the same products and because speedy service is essential they all stock virtually the same inventory. As long as they get paid manufacturers should love these guys. My guess is you seldom see a product back ordered, no matter how small, from any of them because that will send the buyer scurrying to a competitor where it's entirely possible he'll make his next major purchase if he ends up getting upset with company A over the back order.
The reason their debt is so high is the carrying costs associated with maintaining that inventory. They need to turn product very quickly and when they don't earnings suffer and they get eaten alive by their debt service. No matter how big you are sometimes you just can't be all things to all people.
Closing non-profitable stores would help but then they fear they'll lose market share in that area. Maybe a wiser idea would be to pare down the products and realize that you'll lose some sales as a result but you may become more profitable on lower sales and survive.
If your houseboat is sinking it's not really the best idea to try to take all of your worldly possessions into your greedy little arms when you try to swim for shore. Just sayin'.
CS 51 Nocaster, "Nashcaster"/Nashville>Nocaster conv., MIM>Nashville conv./Onamac Tall Blues pups, Squier CVC/Keystones pups, CV 60's Jazz Bass, Matt Freeman PBass/Wilde P46 pup, Taylor 414CE. Roland Cube 40xl, Bugera v5, Roland BC 60, tc BG250, GK MB112.