SOT: Guitar Center on CNN Money

[carrier street]

http://money.cnn.com/2009/05/22/news/economy/retail_creditrisk/index.htm

 

 

Who's at risk?: Credit rating agency Moody's Investors service said earlier this month that credit conditions will worsen for sellers in the coming months.

 

The agency said in a report that it currently rates about 20% of retailers at "Caa1" or lower, "indicating our view that the number of defaults in the retail industry will rise in the next 12 months as the recession deepens."

 

Barneys, Blockbuster (BBI, Fortune 500), Eddie Bauer (EBHI), Claire's Stores, Guitar Center, Michael's Stores and Rite Aid (RAD, Fortune 500) are among the retailers that Moody's has rated "Caa1" or lower.

 

Goel said this serious cash crunch will force more sellers into bankruptcy and subsequent liquidation.

 

 

 

Thought it was interesting that they specifically noted GC. Does this mean they're in worse trouble than others, or just one of the larger retailers who are in trouble?

[Jisatsu]

I was just in GC on monday for their list sale, and judging from how many people were there compared to the past few years, it looks like they are in trouble. Poor customer service, bad management, associates with little to no product knowledge...yeah they are hurting. It doesn't help that most manufactuers are raising prices of their products while lowering the quality.

I've watch the local guitar center in lynnwood wa just go down hill over the past couple years, it's really sad. Compared to other retailers, it seems like they are doing just as bad as Sears Holdings, JC Penny, and the lot...

[matterday]

I was just in there today. They're doing pretty bad from what the salespeople were saying.

[Musickbox]

I'm kind of glad/sad if GC goes down. I have a few friends that work there and know there stuff. But it's way overprice and I always prefer to buy from mom and pop shops or online retailers like Tone Factor.

[carrier street]

What about the affect on the major manufacturers (Fender, Gibson, Roland, etc.) that would lose the sales associated with GC's inventory. I can't imagine that would drive prices down.

[Musickbox]

Good point. But prices are going to keep going up anyways. I must admit I don't have enough knowledge about this to really have a say. Just speaking from a layman's perspective.

[turnitto11]

I kinda don't like guitar center. Local GC is full of a bunch of dumbass's. Can't fix a sandwhich let alone a guitar.

[sethlover]

Besides the economy, I've noticed GC go down hill ever since they stopped paying employees (as a whole) commission some years back.

[Instrospection]

We don't have a Guitar Center up here, but our equivalent is Long and McQuade, and i've noticed that they've raised prices on alot of gear. I speculate that the gear stores will experience the tail end of the massive run of the "rock n' roll dream" that was supposed to be much easier in the internet generation, almost like a Ponzi scheme--guitars, instruments, recording equipment, etc. The truth is that it's still a hobby for most, there's just not the infrastructure or fanbase to support every band out there, and that's a realization that I think some musicians will realize and that's why I think that places like GC and L&M are in for a really, really rough next few years. In L&M, for the past few years, they've just been booming and I didn't quite understand it.....but I keep on thinking that the parallels to the early/ mid 60's when various garage bands were basically forming on what seemed like every block, that the system inevitably can't support that many acts for any extended period of time. It's similar to the credit crunch now, in that the auto companies realized that people have never really been able to afford two or three cars, at least not without being a paycheque away from being bankrupt or out on the street. If everyone had to pay for that Gibson and Mesa Boogie amp right up front without credit, you wonder how many sales there would actually be.

 

In the end, you also wonder how long the gear stores can last by pushing the newest thing when some of the most recent gear is losing value or has limited demand. In the used gear ads on Kijiji around here, I see some of the same gear up for sale for quite awhile. It may technically be worth a certain amount, but if there's not the demand for it, there's no demand for it. I see some guys selling the average newer Gibson, and yeah, technically it's worth 2 grand or whatever, but it doesn't sell that fast. Luxuries are the first thing to be given up when the bottom falls out of an economy.

[claytonjohn18]

GC doesn't have enough employee knowledge to do amp repairs in store.

My buddy got told yesterday that his warranty still stands, but he has to do a bunch of leg work before eventually taking his amp to some other place to get fixed at GC's expense. Outsourcing? wtf.

[tim gueguen]

We don't have a Guitar Center up here, but our equivalent is Long and McQuade, and i've noticed that they've raised prices on alot of gear.

 

 

 

That's a combination of some makers raising their prices and the decline in value of the Canadian dollar since its high a while back.

[Instrospection]

That's a combination of some makers raising their prices and the decline in value of the Canadian dollar since its high a while back.

 

 

For sure. Although, i'm not sure that the CDN dollar being 1.10 US or so a year or so back was responsible? Or do you mean that the US is now trying to penalize us for capitalizing on the US dollar, when it was low?