What happened to Guitar Center?

Discussion in 'Telecaster Discussion Forum' started by Gary in Boston, Jan 6, 2019.

  1. Gary in Boston

    Gary in Boston Friend of Leo's

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    Can somebody simply explain to me how you get 2 BILLION in debt, are they truly giving things away?

    And buy the way, I get the week after Xmas empt look of retail store.

    However, on the day that I was there, GC looked about as dismal as any store I can recall in recent memory.

    Gary
     
  2. memiller

    memiller Tele-Meister

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    By being owned by Bain Capital.

    They take a business, reduce staff, reduce inventory, minimize overhead in many other ways, freeze raises, force expensive people out, cut all investment into infrastructure, and reap the short-term rewards. When the business inevitably starts failing because, get this, you have to have products and people to sell them for a business to operate, they'll use the fact that they're Bain Capital to pull a bunch of loans or investment from other VC firms into that particular company to keep it afloat. This will temporarily spike stock prices but once the wave stops rolling they're left with a ton of debt they can't possible pay back because now they're ten years removed from being able to capitalize on their market leading position, cannot invest in infrastructure fast enough, and will just head to the bankruptcy court to let someone else fix the problem while writing it all off as a business loss.

    Thousands of people will lose their jobs. Hundreds of creditors will go unpaid. But the stocks peaked pretty high so overall it was a win.
     
  3. Dismalhead

    Dismalhead Poster Extraordinaire

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    They can't find quality employees - and the management isn't exempt.
     
  4. JL_LI

    JL_LI Tele-Afflicted

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    I was in GC in Rancho Cucamonga this afternoon. I played a 2006 PRS Custom 24 off the used wall. There was a normal assortment of gear from a couple of hundred to a couple thousand on the wall. The staff was courteous and helpful as always. There’s no way I’m buying the PRS and I was up front about that when I asked to play it. Rancho is actually my favorite GC. I like it better than the GC stores at home. The only place stock was a little thin was semi hollows. And as always, I didn’t leave the store without making a purchase, this time strings for my acoustic. I know times are tough at GC, but you’d never know it at Rancho.
     
  5. T Prior

    T Prior Poster Extraordinaire

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    Except they are not owned by Bain Capital and have not been since 2014.

    Acres Management ( highest stake owner ) has controlling shares of Guitar Center since 2014. They own several Music outlets including Music and Arts stores. Guitar Centers debt which was recorded at just over 1 billion last year is not INVENTORY, it's every holding that is connected to the brand name, buildings, warehouses , loans, etc...It's not 1 billion in debt for guitars hanging on a wall. How many Guitar Center buildings are there in the USA ? They are not small and they are usually in HIGH RETAIL districts which means big bucks for Lease or Mortgages and revolving credit

    More than half of the debt, 615 M, is secured loans. Probably not so un-typical for a business of this size with 280 stores.

    Theres over 280 GC's in the USA. Heres a somewhat recent article on the debt and WHY. Times are have changed and are still changing.

    https://www.dailynews.com/2018/03/2...n-in-debt-reveals-truth-about-musical-tastes/
     
    Last edited: Jan 12, 2019
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  6. memiller

    memiller Tele-Meister

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    Good call out. I totally forgot Ares took a controlling interest. That said, Bain is still part owner and has a seat on their board... and put them in the position they're in in the first place. Then there's the fact that Ares is the same exact type of formless entity, more interested in leveraging what's there than building anything up. S&P downgrading GC's stock is an indication of how little faith they currently have.
     
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  7. LocoTex

    LocoTex Tele-Afflicted

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    I think the real cause is young people's taste in music now. Not that many kids dream of being a guitar hero. You can slam capitalism and blame it all you want, but that's not the reason.
     
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  8. T Prior

    T Prior Poster Extraordinaire

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    right , thats the root cause .

    The main problem business wise is company's are allowed to acquire this excessive debt thing and somehow legally, work there way out of it. Thats not the fault of any company but rather our legislators. Speed limit is 65 but we know they don't give a ticket until we are 9 over , so we drove 73. Then, many of these corporations who play by the written rules, use ONE company as the backbone for debt while the others proper. Corporations don't write the rules. They take loans for company A but use company B for the qualifier. Then sell company B and company A is left to go into default and maybe bankruptcy with no recourse. Neat trick.

    My wife has a small business, for near 20 years now. I can't tell you how many times she has changed her business model because of CHANGE. She still prospers but not with the same products she sold 20 years ago and not at the same same price points. This is business 101.

    Dunkin Dounts now sells all sorts of drinks and sandwiches. When I was a kid growing up it was coffee and donuts ! Some other Coffee outlet changed the landscape for all the others to follow, and they did.

    Guitar Center, who can actually say what the Lawyers are talking about. I do know this, it ain't about Guitars ! They didn't wake up and all of a sudden be a billion in debt.
     
    Last edited: Jan 13, 2019
  9. Mdmoore255

    Mdmoore255 TDPRI Member

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    E7E0F534-5945-43B0-8731-D4C9786AEC4C.jpeg This about sums it up... I couldn’t believe it. I do all my buying from Sweetwater now.
     
  10. Bones

    Bones Telefied Ad Free Member

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    So you would rather buy a guitar sight unseen than simply ask a sales associate to unlock a guitar so you can try it out in person? They have to do something to stop all the damage being done in store to their acoustic inventory.

    Too many people using their acoustic rooms as their own personal Sunday afternoon noodling rooms and then either buying online or more likely, not buying at all.

    Be honest, you weren't going to buy that guitar. If you were interested in it, you would have asked to try it out.
     
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  11. T Prior

    T Prior Poster Extraordinaire

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    I actually was wondering why all those years anyone could just pickup a $3000 Martin, unaccompanied , and do whatever then just put it down , with the new belt rash.

    Try that at Gruhns see what happens.

    Asking to take a guitar down is not a big deal. Think of it another way, what if the guitar of your dreams is up there on the top, locked up, you ask to bring it down then and low and behold it has a gash in it from the last guy and it went in noticed when the sales rep turned away.

    OR vice versa, you bring it down and it's crispy new, unblemished.

    And as said just above , if we weren't going to buy it anyway , then no harm no foul.
     
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  12. Blrfl

    Blrfl Tele-Meister

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    Even so, the damage done to the business can last a long time, especially if the people who made it a good business in the first place have been forced out.
     
  13. radiocaster

    radiocaster Friend of Leo's

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    I looked at their site, seems pretty cool but they don't seem to have any affiliation with the American company.
     
  14. Wrighty

    Wrighty Tele-Afflicted

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    Friend said to me the other day, ‘just like the Japanese, the Chinese will soon make everything. Just like the early days of Japanese kit, they presently make cheap junk. Why? Because that’s what distributors are asking them to make. The Japanese cornered the cheap end of lots of markets and then moved up. Mark my words, the Chinese will do the same and another developing country will fill the ‘crap-gap’ I think he’s right. If we give the Chinese our custom, we’ll soon be buying top quality products made in China and sold at a fraction of the cost of UK (USA) equivalent. The worrying thing is that, we won't, by then have much if a choice........
     
  15. T Prior

    T Prior Poster Extraordinaire

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    I better stay out of this thread from this point on regarding the Chinese and MIC Products in America. either I'll get booted from the TDPRI or the thread will get shut down.
     
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  16. Mdmoore255

    Mdmoore255 TDPRI Member

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    I recently bought an ES 335 from Sweetwater, so I guess so. Pristine from the factory and evaluated before shipping.

    I also bought a nice guitar from a mom and pop shop (about an hour from my house so I don’t get to go often). I grabbed it on a whim and couldn’t put it down.

    If GC cannot staff or trust their employees to stay in and monitor their areas, they are only losing a fraction of those potential impulse buys.

    I get what your saying but there has to be some middle ground. Im not sure if locking things up is the right way to go. It just cheapens the experience.
     
  17. boris bubbanov

    boris bubbanov Telefied Ad Free Member

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    The size of the debt at these various stores, chains that have often gone out of business, is not directly associated with the quality or lack of quality of the day to day business operations. Capitalists (or pirates, if you like) borrow money against the trustworthiness and good name of a business under terms and conditions almost no business could ever expect to pay back. IMO this started as a "poison pill" tool to keep others from buying and liquidating a company but since then it has evolved into an ongoing way to extract wealth from a business undertaking and to play the US Tax Code but having said that, these loan creations can be managed long term and you can probably, almost indefinitely make it appear a company is hopelessly mired in debt and yet the guys in control could transform it into a Winner relatively easily if there were only incentives for them to do so.

    Crafty businessmen have long known how to make it look like their business is worth nothing, owes no taxes, can't offer raises, can't comply with a community's demands for better working conditions or a less cr*ppy looking commercial space or manufacturing plant. This IMO is just a more advanced form of that kind of nonsense.

    A schoolchild brings a note from a doctor, saying the child has been ill and could not complete the homework assignment. Is the doctor's signature forged or is he sleeping with the child's mother. Or does this doctor even exist? This is essentially what's going on here. Maybe the child felt sick because he ate 3 bags of potato chips. Maybe he's not truly sick in any traditional sense.
     
    Last edited: Jan 14, 2019
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  18. Lost_N_Austin

    Lost_N_Austin Friend of Leo's

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    From my perspective here near Tulsa, Oklahoma - the demise of Guitar Center is a fermentation of someone's imagination.

    I took these pictures today and there are hundreds of great guitar choices, amplifiers. The store has been recently remodeled to include about 6 sound booths to cut down on the "Stairway" guitar pickers and the store was packed with everything imaginable, either on display or in new boxes stacked everywhere. Nice guitars too.
    GC100.jpg GC200.jpg GC300.jpg GC400.jpg

    Lost_N_Austin
     
  19. HappyHwy1owner

    HappyHwy1owner Tele-Meister

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  20. Lakeabilene

    Lakeabilene TDPRI Member

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    Forget about the national GC stock and debt. The point is, some GC's are high end and some are cut rate. We have our former high end GC in Raleigh, in an old Toyota dealership building. Five years ago they had a wall of PRS guitars that were $2000-$6000. And a lot of high end Gibsons and Fenders. Now there are only a few high end guitars. And the nearest GC to Raleigh is a strange contrast, they are in a new building but most guitars are Squier or Mitchell, and very few would be worth taking home. It's sad but I have no reason to go into either of them at this point, they have no guitars for me to dream of, just some substandard barely playable cheapos.
     
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