Guitar Center Is Preparing To Potentially File For Bankruptcy

BennyK

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Quite a few videos on my YouTube feed have been popping up concerning the exodus from California and the demographic that they hold.

I just checked some of these articles .... wow !! I have a good friend in San Diego who's moving to Arizona . He had a vague explanation , now I understand .
 

Nacci

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They have been operating this way for several years. It’s a terrible business model, but GC has, for its leadership, been simply a fruit that has been squeezed harder and harder to get the last ounce of profit into their pockets. I’m not just sharing sour grapes here because they are a big corporation or because they have killed the music retail business for many, I’m speaking from my days as an employee of GC and its other divisions and from inside information afterward.

FWIW, GC hasn’t been owned by Bain Capital for some time.
It is of little relevance whether it is Bain Capital or another Capital Investment firm that runs on their model; specifically; acquire a majority stake in a faltering company, use what is left of its good name to leverage it as much as possible, use those newly acquired funds to give massive bonuses to Bain and its proxies then hopefully sell the company before it implodes or second best case scenario file chapter 11, restructure the debt, then sell it to a smaller shark to load it with debt all over again.

Banks do this to a degree, they sell you a mortgage, front load all of the interest, after about 5 years of getting pure interest payments from you what do they do? Sell your mortgage. You then get a letter from the new holder offering you what? An offer to refinance at a very attractive rate and the interest gets front loaded all over again.

That Bain Capital has already owened this company and sucked its blood and it likely now in the hands of sharks lower down on the food chain is not a good sign.
 

lossforgain

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It is of little relevance whether it is Bain Capital or another Capital Investment firm that runs on their model...
That Bain Capital has already owened this company and sucked its blood and it likely now in the hands of sharks lower down on the food chain is not a good sign.
I certainly agree, but as evidenced on this thread it became the thing to blame Bain for GC’s state of mismanagement. In truth, that mismanagement started years before Bain acquired them, then Bain did them less than zero favors, and the poor decisions continue under Ares. I just think if we are going to talk about the state of the industry we should have our facts straight.
 

Nacci

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I certainly agree, but as evidenced on this thread it became the thing to blame Bain for GC’s state of mismanagement. In truth, that mismanagement started years before Bain acquired them, then Bain did them less than zero favors, and the poor decisions continue under Ares. I just think if we are going to talk about the state of the industry we should have our facts straight.
I agree with you but a “Bain Capital Operation” has become synonymous, at least in my circles, with the exact type of operation that I described. To that extent I stand by my statement as well as give a respectful nod to your specificity.
 

UptownShakedown

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It has probably been 6 years since I’ve been in a Guitar Center and that was probably to mess around on the electronic kits, look through the used section then leave without buying anything.

I can distinctly remember times where I would walk into the drum section and no one would even bother to come back there to see what I may need.

In other words; I am ambivalent.
I'm with you on most of this but GC for all its faults was at least a music store that survived, even if it was big box. What if GC went away? What would be there other than a few sporadic Sam Ash's and one drum store per state?
 

Nacci

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I'm with you on most of this but GC for all its faults was at least a music store that survived, even if it was big box. What if GC went away? What would be there other than a few sporadic Sam Ash's and one drum store per state?
I think the direction that “they” are manipulating this economy is very few, chosen, brick and mortar stores, limited social interaction and everyone staying at home and ordering what they need on line.

If I had to bet then that is what I’m putting my money on.
 

UptownShakedown

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possibly the sign the Beatleboom officially has died
deemed non-essential
and been laid to rest.
here lies the suburban Beatleboom....."1962- 2020"....
Interesting take - always good to remember that making music wasnt always associated with a couple of buddies sweating in the garage together.
 

tdcrjeff

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What kind of debt can a company even have that just it’s interest payment, even under today’s ridiculously low rates, is 45 million. Again, outrageous.
The retailer generated about $2.3 billion in sales its most recent fiscal year, according to Moody’s. It has about $1.3 billion in debt.

 

dale w miller

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I'm not sure but I wouldn't think that the employees at GC get paid minimum wage. I guess you can look at it that way but the issue I see with that analogy is that the people working signed up for that minimum wage job. If you accept the job at that pay rate, you're accepting to work hard at that said rate. That minimum wage doesn't give you the right to sit around while you get paid. Now, if the company accepts that minimum work performance from an employee, that's on them. The only job that I ever had at minimum wage was my first job when I worked at a retail store when I was a kid in Junior high. I was happy, appreciated that job and worked hard for that paycheck. I assure you that back then if you didn't earn that "minimum wage" check, you'd get fired. And mind you that was in the 80's which wasn't long ago. I guess entitlement was not as huge of an issue as it is today! I also understood that I had to work hard to not stay at minimum wage for the rest of my life. So bottom line is that I don't get the "minimum wage, minimum work" thing. That's just me though!
First off, the 80’s were a long time ago, between 30-40 years ago. You have a generation of Millennials who are quite entitled and I say that as an employer who expects a good amount of skill and pays between $20-$25/hour.

You have a company that is very misleading in the sense of commission. In the drum department in particular is so high that even the best in the company don’t even hit it. I say that as a friend who was in the top 10 in drum sales every year and never once hit the commission sales requirements. It’s probably why in some cases there’s not even a guy in the department.

You get what you pay for. Anyone with half of a brain figures out that it’s not worth the effort. The employers are probably just glad they have a body to do the minimum amount of work required. You ask, you’ll get help. If you want an educated and enthusiastic sales person, you’ll need to pay them so. That’s why you don’t see the same people there month after month, let alone year after year as when I was a kid in the 80’s.
 
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lrod1707

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First off, the 80’s were a long time ago, between 30-40 years ago. You have a generation of Millennials who are quite entitled and I say that as an employer who expects a good amount of skill and pays between $20-$25/hour.

You have a company that is very misleading in the sense of commission. In the drum department in particular is so high that even the best in the company don’t even hit it. I say that as a friend who was in the top 10 in drum sales every year and never once hit the commission sales requirements. It’s probably why in some cases there’s not even a guy in the department.

You get what you pay for. Anyone with half of a brain figures out that it’s not worth the effort. The employers are probably just glad they have a body to do the minimum amount of work required. You ask, you’ll get help. If you want an educated and enthusiastic sales person, you’ll need to pay them so. That’s why you don’t see the same people there month after month, let alone year after year as when I was a kid in the 80’s.
Unless I'm reading it wrong, I think everything that you wrote confirmed what I wrote!
 

Nacci

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The retailer generated about $2.3 billion in sales its most recent fiscal year, according to Moody’s. It has about $1.3 billion in debt.



Good work, that is interesting. I guess the only question is how often that 45 million interest payment is due?

What is that, 2% of annual sales, 6% quarterly, 12% bi annual and 24% monthly.
 

Morello Man

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When I went to the GC near here 10 years ago , give or take, the drum department had two or three drum mags represented, drum books and popular drum-centric CDs and DVDs, good selection of sticks and a very good selection of mallets, a couple or three kits set up, wall space taken up with kits stacked up, an enclosed cymbal room with a representative selection, one or more friendly employees. That situation lasted for several years. Last time there was two years ago; like a ghost town, no merch, no people. Like they were packing up to move, only they weren’t.
 

Dumpy

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What would always drive me out of the drum department in it’s heyday was it seemed there would be kids playing drums super loud. I couldn’t hear myself think, let alone have a conversation with the employee. It literally got to a point where it wasn’t worth it to try to buy anything in the drum department. Fast forward a few years, you couldn’t find a soul to help you.
 

hector48

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I've been hearing this for a few years now. Yet, they remain open.
 


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