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More on Guitar Center's Bankruptcy this time with Numbers

Discussion in 'Bad Dog Cafe' started by warrent, Oct 28, 2020.

  1. Peegoo

    Peegoo Poster Extraordinaire

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    Here are my own numbers that show why GC is sinking.

    I bought this Peavey Classic 20 amp off the used pile at GC; everything worked, it contained fresh JJs, and had a non-stock Celestion Gold 10" in it.

    This is real...I'm not making this up. I kept the tag because nobody'd believe me if I told 'em.

    [​IMG]
     
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  2. archetype

    archetype Fiend of Leo's

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    Man... someone at that GC store didn't bother with 2 minutes of research. Great score.
     
  3. VillainSean

    VillainSean Tele-Meister Gold Supporter

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    Well, Fender is also now a online "Fender Dealer" as well.
     
  4. PastorJay

    PastorJay Tele-Afflicted

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    I have this conversation with my youngest daughter, the Wall Street lawyer, fairly often. The leveraged buy out is usually great for everyone involved when it happens. The owners of the target company get dollars as a reward for getting this company up and running, and maybe even profitable. The people who put the deal together get paid fees. The new owners own a hopefully profitable company, and usually find a way to suck cash out of the venture and put it in their pockets.

    But the "leveraged" thing often catches up with the company. High debt leaves the company unable to adapt to a changing market. Especially in brick and mortar retail, which was already overbuilt *** before Amazon became a huge force, and now when all brick and mortar is suffering due to the disease that shall not be named, many of the companies that are failing or being forced into bankruptcy were acquired in LBOs.

    ***Confession. Before going into the highly lucrative field of pastoring small churches;)

    I practiced law for 16 years. From the mid-90s onward, I did industrial and retail development, mostly representing shopping center developers and major tenants. So maybe I contributed on a very small scale to the over building of retail.
     
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  5. DekeDog

    DekeDog Tele-Holic

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    Good for everyone but middle and lower tier employees. Even profitable companies who are bought by holding companies will see branch closures, wage freezing/reductions, disappearing bonuses and incentives, employee cutbacks, etc. Management by MBAs means putting profits before the benefits to employees (and customers), and management and administration by bean counters and those ignorant of the product, the market, and what it takes to service it.

    But, if the management and policy makers at GC knew what they were doing, they wouldn't be in their situation to begin with. So there's that.

    And if you didn't have companies like Gibson dictating conditions, that might help also.

    Personally, I'll never set foot in another GC and haven't for well over ten years.
     
    Last edited: Oct 29, 2020
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  6. chris m.

    chris m. Poster Extraordinaire

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    The changing market at deep levels of our national culture was hard to foresee and hard to adapt to. Remember all those teen movies in the 80s where everyone would hang out at the mall? How about when we would wait in line at Tower records when a new album got released? I remember when the only way to see gear and learn what was available was to go to a music store like GC or a local place, and read Guitar Player magazine. All of that has dramatically changed with websites, YouTube, blogs, etc. I think anyone trying to sell anything needs to adapt to the new reality or they will go extinct. The only question is how quickly.

    And some won’t/can’t adapt because they were designed for another era and culture, and now what used to be competitive advantage is now a weakness. It’s like developing your body and skills for years to win at Sumo wrestling and then being told you have six months to get ready to be a jockey in the Kentucky Derby. Wrong physical infrastructure, wrong skillset.
     
  7. Greggorios

    Greggorios Friend of Leo's Silver Supporter

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    Thanks for posting. This is a good, solid, FACTUAL and accurate appraisal of the actual business status of GC. They'll reorganize, which is what bankruptcy and bankruptcy protection is all about. (Bankruptcy is not synonymous with going out of business.) Closing and liquidating assets is the option of last resort. They're nowhere near that despite the heavy debt load.

    I think the quotes below are the "crux of the biscuit" as FZ would say. It's been far too common for the past 30 or 40 years. Financial wizards are not necessarily good merchants.

     
    Last edited: Oct 29, 2020
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  8. Musekatcher

    Musekatcher Friend of Leo's

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    A good target annual profit margin for a medium to large business is 10%. So, making 10% profit on a $49 Classic 20 is fine, if that's the average. If it sat for 2 years, you needed to make two years worth of margin. And so on. I think the person pointing to Bain as the problem, is correct. Its just plain ole mismanagement. BTW, mismanagement is often code for fraud. Banks, legal, accountants are all heavily involved in medium to large businesses. So when things start going South, there's a lot of trouble shooting. When things go South this long, its a guarantee that somebody was sifting, skimming, profiting from the lack of profit. All the loans to "restructure", all the "reorganizations" and all the "investments" in affordability are code for dollars, and they went somewhere. Well, we know where those dollars went. And those folks are either long gone, or insulated from the consequences.

    PS - a great, revealing, almost mandatory story is the largest municipal bankruptcy filing of all time in 2011. The lead up is years of fraud, lending, fake books, all fueled by banks, individuals and contractors getting rich as a result.
     
    Last edited: Oct 29, 2020
  9. jtees4

    jtees4 Tele-Afflicted

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    I will truly miss GC. Every time I sell something on Craiglist, I meet the buyer at one of two GC stores....all guitar players know where they are and have no problem meeting me there. So, yeah...I will miss GC. Having said that, I have bought a decent amount of stuff from Musicians Friend, thier 45 day return policy beats Sweetwater....and YES Sweetwater is a great company and I have bought from them also. So hopefully, MF sticks around.
     
  10. PastorJay

    PastorJay Tele-Afflicted

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    Of course, middle and lower tier employees aren't really involved in the deal. They're usually unfortunate bystanders to the transaction.
     
  11. MarkieMark

    MarkieMark Friend of Leo's

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    Sometimes it is far simpler.
    It seems the trick is to buy, invest just enough to make it look like a turnaround.
    Bail and run with the money.

    Make no mistake. GC was insolvent and headed for the dumpster a long time ago.
    I suspect the bottom line is that Bain miscalculated on just how bad it was or this whole deal would have been over and liquidated years ago.

    And they will still be looking for a decent job.

    See above.

    My experience locally-
    Years ago when there was a decent sale on an item I wanted I drove about 30 minutes to what was then the closest GC.
    Too big to run efficiently was my immediate observation.
    Lack of customer service skills. Sprawling mess. Staff too busy entertaining themselves to be bothered.
    I went back a couple of times. Browsed. Observed the situation hadnt changed. Never bought another thing there.
    Fast forward. A local GC opened about 6 years ago. Less than 10 minute drive.
    I went to the grand opening.
    I have gone in about 5 times since.
    I have never been able to bring myself to buy a single thing there.

    The worst customer relations skills I have ever witnessed.
    Inventory looks like its a thrift store at the holidays. Half has no price tags. Thirty percent looks not just used, but well worn. The stuff that is marketed as used is priced within 10% of new.

    I have never, not one single time pulled a guitar to examine that even resembled being setup properly. Not even close to "out of the box new" setup. Usually really messed up setup.

    It just so happens I was in the area and passed through the store today.
    Disorganised, huge gaps in inventory and a sense of desperation.

    No bargains, trashed store, no help.
    I dont know how they can possibly pay the lease on the location.

    The only reason they are still there is leverage. They needed to go a long time ago before they did so much damage.

    On the other hand,
    I have a friendly helpful sales rep at another source.
    Everything I have ordered has come promptly, was fairly priced and came in sealed new boxes or was further discounted.
    I have purchased multiple instruments and every one came ready to play, setup as good or better than any brand-new out of the box I have ever gotten anywhere else.

    I wont miss GC and the market will recover and adjust.
     
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  12. Ironwolf

    Ironwolf Poster Extraordinaire Gold Supporter

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    I've said this before. My local GC is great. The people are knowledgeable and helpful; most of them have been there for 10 years or more. I know them by name and they know me by name. If they don't have or can't get something I need, they run down and recommend where I can get it. Two or three weeks ago I ordered my new figured top ES-335 from them. The order was placed on Tuesday evening, the guitar was in my hands on Friday. When I had checked with Sweetwater for the same model, they told me they could place a new order in January and should have it by April, IF I paid up front. If your local GC sucks, I'm willing to bet it has more to do with the caliber of potential employees in your area than anything with the company.
     
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  13. hotrodkid

    hotrodkid Tele-Afflicted

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    Just wondering how GC would go about obtaining used gear to sell online? It appears their online used/vintage gear is their niche.
     
  14. PhredE

    PhredE Tele-Afflicted

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    If, and however GC/MF survives, I hope they borrow from the approach of Thomann for their online sales. Their website is very efficient, well organized and contains loads more information about each product they offer. If it weren't for the extra shipping, I'd buy all my stuff from them.
     
  15. bcorig

    bcorig Friend of Leo's Silver Supporter

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    “Bain”.
     
  16. Musekatcher

    Musekatcher Friend of Leo's

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    I think GC may survive. Its a matter of the terms, or new ownership. There's plenty of market for their products and service, they have good distribution and franchise coverage, there's no reason they can't operate profitably, minus the debt [and skimming]. If the courts do their jobs, they will strip the fake ownership, responsibly strip the debt, and put competent leadership in place.
     
  17. alnico357

    alnico357 Tele-Afflicted

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    Earlier today I ordered an open box Lunchbox reverb amp from Musician's Friend for 87% of the new-in-box price. 13% off to let some else open it first is OK with me.
     
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  18. Rufus

    Rufus Tele-Afflicted

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    Whenever there is any kind of GC thread, I see countless people complaining about how bad GC is...yet they seem to keep going back?!?!?

    Newsflash: most GC's are NOT full-service, well run stores. If you haven't done your research on a product before you go in, then its your own fault. If you want low prices, don't expect well setup guitars. Go in on a weekday, not a weekend and you don't have to hear the noise.

    I look at GC as a way to kill some time when I'm near one, walk around and maybe make an impulse buy or get something I need immediately. You can try out amps, guitars and pedals that are in stock. Can't do that over the Internet. (I DO buy many things from Sweetwater, though AFTER I have researched what I want to buy.)

    If you hate GC, then don't go there. Save yourself the aggravation...but I suspect that some folks enjoy hating them.

    Geez...I'm Lefthanded and they MIGHT carry 1 or 2 lefty guitars if I'm lucky, but I don't take it personally...

    as Michael Corleone said in the Godfather '...its just business."

    I think GC will be around for quite a while yet...but if they disappear, I will survive.
     
  19. soundchaser59

    soundchaser59 Tele-Afflicted

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    Same here. I wouldn't miss it if it disappeared tonight. I cringe and gag every time I drive by and see that sign, and I'm sorry it sits so close to one of my favorite restaurants. I don't care if they are the last store in the galaxy that has what I need, I will not go there. I will change my ways so that I don't need whatever any more, or I'll do without, or I'll pay more to help someone else stay afloat.
     
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  20. soundchaser59

    soundchaser59 Tele-Afflicted

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    There isn't enough room on this page to quote all the people who predicted the day they took over that Bain would end up destroying GC. And here we are!

    I'm no expert, and I can't argue the point, but it seems to me if you take the wheel and then the thing goes off course and crashes, that pretty much convicts the driver.
     
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