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GC Financial Update


Teh

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The latest on the nation's favorite love-to-hate music store...

http://www.marketwatch.com/story/guitar-center-bonds-slide-to-record-lows-on-concerns-about-companys-debt-burden-2017-04-25

On the plus side, the article mentions that iHeartMedia may not make it to the end of the year.  That news just breaks my iHeart....

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Needless Markup is in trouble, too?  Where's all the rich people who used to buy all their useless crap?  <_<  BESIDES shopping at Amazon?  :rolleyes:

I've never shopped at Amazon for the little accessories that I usually get via ordering online, like guitar and bass strings.  Am I missing out?

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1 minute ago, crunchee said:

 

I've never shopped at Amazon for the little accessories that I usually get via ordering online, like guitar and bass strings.  Am I missing out?

Nope, eBay is usually cheaper & with free shipping

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   I work 5 minutes from one,  and I check the used section a couple times a week,  Was

telling when their manager,  good guy, always remembered your name,  left to work for

our local store, the music mill...  

 

this really screws up my lunch hour.     I can probably go to bed bath and beyond, but it

won't be the same.  

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I don't know a lot about this kind of thing, but I don't recall ever hearing about one of these groups doing a leveraged buy out, adding lots of debt to the company and then the company announcing later that it is doing great.    

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As one of the former HFC members used to pontificate "We Are All Doomed". 

The photograph for the article of the GC Hollywood Rock of Fame for Guitar Center with Dimebag Darrell on May 17th induction - from 2007.   Nice touch there.

Hamerica

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Meh- they'll live a few more years.  If the debt was a serious problem, they would have cratered 5 years ago (when we hoped they would-have).  Its too late for the majority of storefront mom-n-pops driven out by the big-box retailer. 

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Many of the smaller retailers compete really well in my area. They tend to offer more personal service and develop closer relationships with their customers.  I like walking in the door and being greeted by name.  Years ago I had a store owner, Jeff Firestone at Retro Music in Keene NH, call me when I was very ill because he hadn't seen me in the store recently and wanted to make sure I was OK. I wasn't a big spender but he got first crack at anything I needed. My first two Hamers came out of his store. One had a hold on it under my name before I even knew it was there. That's service man! It's that way for me today. I know I can probably get whatever it is cheaper online or from GC but the personal connection has value to me. I'll continue to shop the small shops and trade with people I know, like all of you, online.

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I know nothing about the relative pitfalls of GC but in the U.K. the guitar shops that stand the test of time have a lot of loyal customers for repeat business.  The personal touch really helps as does a competitive online presence and a tendency towards honesty.

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1 hour ago, scottcald said:

I don't know a lot about this kind of thing, but I don't recall ever hearing about one of these groups doing a leveraged buy out, adding lots of debt to the company and then the company announcing later that it is doing great.    

It is possible IF the folks doing the buyout have a good business plan and a longer term outlook. From limited personal experience (this goes back to the 80s), IF you have a good management team in place AND incentivize them properly to make things better, profits can be huge. Longer story, that. ;)

In many of these cases, and GC seem to be a classic bad example, people get in with little down, force as much debt down investors' throats as possible ("How can you go wrong? We are selling Classic Gibsons Fenders  and and PRSi!") then rakes off all the cash for themselves as an "early dividend", gets rid of anyone with any ambition to actually earn a living or have a career, stiffs suppliers and THEN wonders why the magic is no longer working.

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1 minute ago, django49 said:

It is possible IF the folks doing the buyout have a good business plan and a longer term outlook. From limited personal experience (this goes back to the 80s), IF you have a good management team in place AND incentivize them properly to make things better, profits can be huge. Longer story, that. ;)

In many of these cases, and GC seem to be a classic bad example, people get in with little down, force as much debt down investors' throats as possible ("How can you go wrong? We are selling Classic Gibsons Fenders  and and PRSi!") then rakes off all the cash for themselves as an "early dividend", gets rid of anyone with any ambition to actually earn a living or have a career, stiffs suppliers and THEN wonders why the magic is no longer working.

You just described Stu Carter of Fat Sound/wife-beating infamy. 

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2 minutes ago, unfun75 said:

You just described Stu Carter of Fat Sound/wife-beating infamy. 

Better to get in bed with the KKRs of the world BEFORE every Tom, Dick and Harry thought an LBO was an easy way to either:

A. Double your money in a quick flip without breaking a sweat, or

B. Run a "pump and dump" on some idiots HOPING for option A.

The problem with looking for a greater idiot to bail you out is that there are fewer of them than you think.

It is not the 80s any longer and a lot of the "low hanging fruit" is long gone.

 

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All I know is that they keep sending ME money. GC has sent me 116.00 in the last 3 months as I have racked up "Reward Points". I'm sure its a a way to get me to spend more but I never due. I just find something or a few items like pickups or strings, straps to buy and be OMW. 

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2 hours ago, unfun75 said:

You just described Stu Carter of Fat Sound/wife-beating infamy. 

What the hell ever happened to Kim, the guy who first managed Fat Sound in the early '90s? He was a good guy and sold me my first Hamer.

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this GC (-) bond issue will be like a ripple in the pond.

A ripple that forms into a tidal wave when close to shore.

Mark my words.

Henry will finally birth that cow.

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There's a GC about 5 miles away from me in Rockville.  THey're opening another huge one this week 8 miles in the other direction in Siver Spring.

WTH, GC?!

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Thy're gonna have to restructure at some point. I can't figure out the mad expnsion they seem to be doing. I can report that the closest of the three metro Atlanta GCs has a generally cheerful and helpful staff, fiar prices, loads of high-end swag and often some cool stuff in the used section. Of the smaller local shops, one is overpriced and too high-pressure for me, one is beginner stuff and uninterested staff, and another is all boo-teek.

The big coprporation are not inherently evil. The mom 'n' pops are not automatically saints. Aside from the weird business shenanigans they were caught up in, the business model for GC isn't that bad and they often are good places to shop. 

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While it would be better for everyone if they survive, that doesn't fix the fact that the people with money to buy expensive gear have way too many other options to tolerate the way most of their locations are run.

I can buy commodity stuff (strings/picks/cables and the like) online either direct from their manufacturers or from smaller operations. There has to be a real compelling reason for me to give GC any money at all-the last one was their huge guitar blowout in 2013 where they were dumping $6500 guitars for $1999 online.

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15 hours ago, Biz Prof said:

What the hell ever happened to Kim, the guy who first managed Fat Sound in the early '90s? He was a good guy and sold me my first Hamer.

IIRC Kim started Fat Sound and was from Texas... no idea now.

Mark Kane still does repair in Cary NC under Fretking, Inc.

Mike Ayers has been at Harry's for years now. 

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Let's be realistic, most mom and pop music stores sucked before GC entered the picture, which made running them out of business rather easy.  When you combine it school instrument rentals are way down and the Internet, the music instrument business is fading away.  There was a time every home had a piano.  It's ok, people evolve, the younger folk don't want to follow dad's musical style.  We had out day, and now it's over. 

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56 minutes ago, LefThanDed said:

Mike Ayers has been at Harry's for years now. 

Forgot about Mike Ayers.  On a related note, it's funny to think back and recall that in the early days of Harry's Guitar Shop , one could find Audley Freed behind the counter. 

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51 minutes ago, Studio Custom said:

Let's be realistic, most mom and pop music stores sucked before GC entered the picture, which made running them out of business rather easy.  When you combine it school instrument rentals are way down and the Internet, the music instrument business is fading away.  There was a time every home had a piano.  It's ok, people evolve, the younger folk don't want to follow dad's musical style.  We had out day, and now it's over. 

Looking at P&L would be the accurate way to know, but the GC near me is usually packed. Broad mix of people, too. Not just us dead white guys. Musical trends come and go, but music is part of the human experience, and it's usually a social act, not solitary.

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12 hours ago, cmatthes said:

There's a GC about 5 miles away from me in Rockville.  THey're opening another huge one this week 8 miles in the other direction in Siver Spring.

WTH, GC?!

It's the Mattress Firm approach. GC has become a real estate empire with a retail operation on the side.

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