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Guitar Center in Fiscal problems includes Musician’s Friend, Harmony Central..Others!
Old 18th February 2013
  #1
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Guitar Center in Fiscal problems includes Musician’s Friend, Harmony Central..Others!

I grew up with MusiciansFriend and find it is in deep financial trouble .... Now what? Will someone buy the internet companies? Or the brick and mortar ones? I think Zzounds is also included ?
Old 19th February 2013
  #2
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Zzounds isn't included...they're owned by AMS (or the same company that owns AMS).
Old 19th February 2013
  #3
Eat
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Always used to avoid MF unless necessary and liked AMS mostly. What I remember of them a number of years back was high shipping charges compared to others.

For example, they had some cheap pa speakers on sale I wanted but the shipping jacked up the pricing to over what the normal price was... something like $40 to ship. Then I'd call AMS and they matched the sale price and shipping was only $5.

But right now I've been buying some more gear lately and I took notice of MF emails with extra 10-15% on stuff even already on sale plus free shipping.

This probably has been going on for a while with MF but I stopped buying gear for some years and didn't pay attention anymore.

It seems that all these big name music online stores have been discounting and free shipping themselves into bankruptcy I guess
Old 19th February 2013
  #4
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From the WWW

Bain Capital's "Guitar Center" going down fast

Bain Capital's "Guitar Center" 1.5 Billion in debt since the acquisition... heading for bankruptcy

Excerpt from the Retail Column - Music Trades Magazine July 2012:

Notwithstanding solid operational performance, Guitar Center has been hobbled by a crushing $1.56 billion debt burden that was incurred in late 2007 when Bain Capital acquired the business for $2.2 billion. Since the acquisition the company has consistently operated in the red, unable to cover the approximately $160 million in annual interest expense. The Steady losses have triggered regular credit "downgrades" from the ratings agencies Standard & Poor's and Moody's. In the most recent downgrade, issued on May 8th 2012 Standard and Poor's wrote " We have downgraded Guitar Center's liquidity profile to "less than adequate" and revised our ratings outlook to negative from stable."


It is not hard to see that GC is and has been in trouble for some time, They are selling nothing but low end equipment and are no longer wheeling and dealing like they use to. Behringer has replaced most of the good equipment they use to carry and brands like MACKIE, Symetrix, Tascam and any of the higher end products they use to carry are gone from the shelves. Our local GC looks more like a flea market with all the trade ins they have laying around and the whole place looks tired and in need of a general "freshening up". They also seem to be hiring anyone who walks in the door and many of their new hires know very little about what they are selling, Our GC still has a GREAT manager and a GREAT pro audio salesmen but even they cannot lift the store out of the doldrums.

I also think they are reaching the saturation point with equipment sales. Everyone has just about everything they need for a home studio and most people don't keep buying new microphones or new equipment every week. I still see a lot of teenyboopers buying their cheep microphones and their low end guitars and their computer interfaces hoping to be the next BIG thing in recorded sound but even those sales seem to be down.

I see a lot of people "tire kicking" but not too many buyers.

I use to be a regular Saturday shopper but I find less and less that I need to buy since most of the stuff they are selling is junk. I think in the last two months I have been at our local GC twice.

Since Musicians Friend is owned by GC I think the same things could be said about them.

I ordered a ribbon microphone from MF and when it came the box had been opened, there were finger prints all over the microphone and the unit looked used. I sent it back for a refund. Maybe no one cares anymore at MF but to send someone a supposedly new microphone that is used seems somewhat pathetic.

Only time will tell what is going to happen to both GC and MF.
Old 19th February 2013
  #5
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Quote:
Originally Posted by Eat View Post
Always used to avoid MF unless necessary and liked AMS mostly. What I remember of them a number of years back was high shipping charges compared to others.

For example, they had some cheap pa speakers on sale I wanted but the shipping jacked up the pricing to over what the normal price was... something like $40 to ship. Then I'd call AMS and they matched the sale price and shipping was only $5.
That's because AMS took a hit on the shipping. $40 is not "jacked up" - that's what the actual shipping cost was. I was just at the post office this morning, mailing a retail copy of some software (total weight: 11.3 oz) and the cost was over $5.


Quote:
Notwithstanding solid operational performance, Guitar Center has been hobbled by a crushing $1.56 billion debt burden that was incurred in late 2007 when Bain Capital acquired the business for $2.2 billion. Since the acquisition the company has consistently operated in the red, unable to cover the approximately $160 million in annual interest expense. The Steady losses have triggered regular credit "downgrades" from the ratings agencies Standard & Poor's and Moody's. In the most recent downgrade, issued on May 8th 2012 Standard and Poor's wrote " We have downgraded Guitar Center's liquidity profile to "less than adequate" and revised our ratings outlook to negative from stable."
I've never had any love for GC, but what's going on with them is some grade-A bull**** that's 100% legal. The way this (and many other acquisitions) worked is that the investors borrowed a bunch of money to take over the company, then dumped that debt onto the company itself. They get to squeeze out a bunch of profit for themselves up front, then part out the remnants once the thing crashes. GC may not be thriving, but this debt burden wasn't their fault; were it not for that, they would likely be getting by just fine.

-Dan.
Old 19th February 2013
  #6
Quote:
Originally Posted by Thomas W. Bethe View Post
From the WWW

Bain Capital's "Guitar Center" going down fast

Bain Capital's "Guitar Center" 1.5 Billion in debt since the acquisition... heading for bankruptcy

Excerpt from the Retail Column - Music Trades Magazine July 2012:

Notwithstanding solid operational performance, Guitar Center has been hobbled by a crushing $1.56 billion debt burden that was incurred in late 2007 when Bain Capital acquired the business for $2.2 billion. Since the acquisition the company has consistently operated in the red, unable to cover the approximately $160 million in annual interest expense. The Steady losses have triggered regular credit "downgrades" from the ratings agencies Standard & Poor's and Moody's. In the most recent downgrade, issued on May 8th 2012 Standard and Poor's wrote " We have downgraded Guitar Center's liquidity profile to "less than adequate" and revised our ratings outlook to negative from stable."


It is not hard to see that GC is and has been in trouble for some time, They are selling nothing but low end equipment and are no longer wheeling and dealing like they use to. Behringer has replaced most of the good equipment they use to carry and brands like MACKIE, Symetrix, Tascam and any of the higher end products they use to carry are gone from the shelves. Our local GC looks more like a flea market with all the trade ins they have laying around and the whole place looks tired and in need of a general "freshening up". They also seem to be hiring anyone who walks in the door and many of their new hires know very little about what they are selling, Our GC still has a GREAT manager and a GREAT pro audio salesmen but even they cannot lift the store out of the doldrums.

I also think they are reaching the saturation point with equipment sales. Everyone has just about everything they need for a home studio and most people don't keep buying new microphones or new equipment every week. I still see a lot of teenyboopers buying their cheep microphones and their low end guitars and their computer interfaces hoping to be the next BIG thing in recorded sound but even those sales seem to be down.

I see a lot of people "tire kicking" but not too many buyers.

I use to be a regular Saturday shopper but I find less and less that I need to buy since most of the stuff they are selling is junk. I think in the last two months I have been at our local GC twice.

Since Musicians Friend is owned by GC I think the same things could be said about them.

I ordered a ribbon microphone from MF and when it came the box had been opened, there were finger prints all over the microphone and the unit looked used. I sent it back for a refund. Maybe no one cares anymore at MF but to send someone a supposedly new microphone that is used seems somewhat pathetic.

Only time will tell what is going to happen to both GC and MF.
This particular fiasco has nothing to do GC and everything to do with the ****** bags at Bain. That's what they did to Duncan Donuts. And KB Toys. It doesn't matter how well you do once Bain gets their mitts into you.
Old 19th February 2013
  #7
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Quote:
Originally Posted by donpakka View Post
This particular fiasco has nothing to do GC and everything to do with the ****** bags at Bain. That's what they did to Duncan Donuts. And KB Toys. It doesn't matter how well you do once Bain gets their mitts into you.
I am not sure that GC did not have a hand in the overall downgrading of their reputation and their ethics. They started selling junk equipment and failing to deal they way they had always done long before Bain took them over. I agree Bain is only in it for the MONEY and not for the long haul or to make us happy.

Too bad!!!
Old 20th February 2013
  #8
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Quote:
Originally Posted by donpakka View Post
This particular fiasco has nothing to do GC and everything to do with the ****** bags at Bain. That's what they did to Duncan Donuts. And KB Toys. It doesn't matter how well you do once Bain gets their mitts into you.
yeah guitar center was doing marvelous before bain acquired them and they just decided to run them into the ground for fun, am i rite
Old 20th February 2013
  #9
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Quote:
Originally Posted by Thomas W. Bethe View Post
I am not sure that GC did not have a hand in the overall downgrading of their reputation and their ethics. They started selling junk equipment and failing to deal they way they had always done long before Bain took them over.
That doesn't mean they weren't profitable. Look at Wal-Mart - their products and service are abysmal, but they're swimming in money.

-Dan.
Old 20th February 2013
  #10
Gear Nut
 

I see lots of misinformed Bain Capital bashing. I was a stockholder of GC. The stock went to the mid high $60's in 2005 and then crashed to low $30's the same year because of GC's executive mismanagement. Wiped out half the company's market capitalization. Buying private jets, lavish expense accounts, too many store expansions, etc.

Bain Capital came in and purchased the stock for $62 PPS, restoring the capital that had been recklessly destroyed by GC. As a stockholder I was happy to see the market cap back to what it had been previously and to be made financially whole again. Get your facts straight before bashing Bain in this case.
Old 20th February 2013
  #11
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I'm sad to hear this news. I have bought the vast majority of my hardware from Musician's Friend.
Old 20th February 2013
  #12
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Quote:
Originally Posted by iluvatar View Post
That doesn't mean they weren't profitable. Look at Wal-Mart - their products and service are abysmal, but they're swimming in money.

-Dan.
Actually Walmart just had their worst February sales month in seven years. I think part of it is that people just are having less and less money and "luxury" items such as "gear" just went first.
Old 21st February 2013
  #13
Registered User
 

Harmony Central changed their forum system last month. Absolutely horrid. Bain has ruined that website.
Old 22nd February 2013
  #14
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Quote:
Originally Posted by Thomas W. Bethe View Post
From the WWW

I also think they are reaching the saturation point with equipment sales. Everyone has just about everything they need for a home studio
Really? I must have left my SSL in the other room. What website are you on ?
Old 22nd February 2013
  #15
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Quote:
Originally Posted by Animus View Post
Actually Walmart just had their worst February sales month in seven years. I think part of it is that people just are having less and less money and "luxury" items such as "gear" just went first.
I think the Wal-Mart thing might be a little off. Many people I know, myself included just refuse to shop at Wal- Mart, ASDA or anything remotely Wal-Mart. Their business model is predatory and actually diminishes the quality of life of their employees and their customers.

Hiring someone to council your employees on how to get welfare instead of paying them properly should be criminal. Having a place called Wal-Mart City in China...

I digress, I do not mean to stand on a soap box. Hopefully, as the companies die off or get weaker from competing on the cut throat bottom a few adjustments will be made on how to maintain stable economic enterprises.

As far as Bain Capital goes, everyone is right; including the man who's stock investment was fortified by Bain's acquisition. Bain re-inflates stock prices then takes a quick inventory turn to low grade cheap high margin inventory while the clientele is still around takes their cut and eventually cuts up a toxic brand to eek out a last bit of cash. I do not make any moral judgment on that sort of business model; it is legal and when GC was sold everyone who cared to know could have found out.
Old 22nd February 2013
  #16
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Thomas W. Bethe's Avatar
Quote:
Originally Posted by mingustoo View Post
Really? I must have left my SSL in the other room. What website are you on ?
This one...
Old 22nd February 2013
  #17
181483
Guest
Quote:
Originally Posted by donpakka View Post
This particular fiasco has nothing to do GC and everything to do with the ****** bags at Bain. That's what they did to Duncan Donuts. And KB Toys. It doesn't matter how well you do once Bain gets their mitts into you.
"mitts"...hehe. Nice one.
Old 22nd February 2013
  #18
Gear Guru
 
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Quote:
Originally Posted by RRCHON View Post
I think the Wal-Mart thing might be a little off. Many people I know, myself included just refuse to shop at Wal- Mart, ASDA or anything remotely Wal-Mart. Their business model is predatory and actually diminishes the quality of life of their employees and their customers.

Hiring someone to council your employees on how to get welfare instead of paying them properly should be criminal. Having a place called Wal-Mart City in China...

I digress, I do not mean to stand on a soap box. Hopefully, as the companies die off or get weaker from competing on the cut throat bottom a few adjustments will be made on how to maintain stable economic enterprises.

As far as Bain Capital goes, everyone is right; including the man who's stock investment was fortified by Bain's acquisition. Bain re-inflates stock prices then takes a quick inventory turn to low grade cheap high margin inventory while the clientele is still around takes their cut and eventually cuts up a toxic brand to eek out a last bit of cash. I do not make any moral judgment on that sort of business model; it is legal and when GC was sold everyone who cared to know could have found out.

You are in a minority about your feelings on Walmart (I am not saying I don't agree with you though). Most of the bottom social strata uses and relies on Walmart for their cheap goods. Walmart are the biggest grocer in the country. Thus if Walmart are feeling the pinch you know the economy is in the tank and people are scraping to get by.
Old 22nd February 2013
  #19
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Quote:
Originally Posted by Animus View Post
You are in a minority about your feelings on Walmart (I am not saying I don't agree with you though). Most of the bottom social strata uses and relies on Walmart for their cheap goods. Walmart are the biggest grocer in the country. Thus if Walmart are feeling the pinch you know the economy is in the tank and people are scraping to get by.
We just got a WalMart in my town. Lots of college and town's people fought it. Now those same people are using it for shopping as they supposedly have the lowest prices around. The economy sucks right now and it is not suppose to get better anytime soon. If gas goes to $5.00 a gallon this summer, as some newscasters have suggested, then the economy will go back into the dumper. GC and MF are just the tip of the iceberg. Our town has never had a vacant store front since I moved here in 1969 now their are four and there maybe two others soon. Retail is taking it in the neck right now and it does not look good for this summer. Last summer was bad this summer could be a real mess. Not good.
Old 22nd February 2013
  #20
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Quote:
Originally Posted by Thomas W. Bethe View Post
We just got a WalMart in my town. Lots of college and town's people fought it. Now those same people are using it for shopping as they supposedly have the lowest prices around. The economy sucks right now and it is not suppose to get better anytime soon. If gas goes to $5.00 a gallon this summer, as some newscasters have suggested, then the economy will go back into the dumper. GC and MF are just the tip of the iceberg. Our town has never had a vacant store front since I moved here in 1969 now their are four and there maybe two others soon. Retail is taking it in the neck right now and it does not look good for this summer. Last summer was bad this summer could be a real mess. Not good.
Whoa - a WalMart in Oberlin! What is this world coming to? Back in the day, the students would have torched the place!
Old 23rd February 2013
  #21
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Quote:
Originally Posted by matyas View Post
Whoa - a WalMart in Oberlin! What is this world coming to? Back in the day, the students would have torched the place!
Not anymore...a fire might hurt all the beer, wine, potato chips, and other party foods they now buy at the local WalMart.

There were some very vocal students, faculty and townspeople when the WalMart store was in the planning stage but most of those "protesters" now shop there.

The only real bummer for students is that WalMart does not sell alcohol on Sundays so they have to stock up on Saturday.
Old 23rd February 2013
  #22
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Unfortunately any company that is owned by a finance outfit like Bain is living on borrowed time . Without actually looking it up I can with fair certainty guess that Bain is either caught in some short squeeze that went against them or they got called to task on the sunset date of some derivative bet they made.

Anything they own is fair game for liquidation if it means saving the core institution or even just buying them time.

The financial crisis is not over folks. Don't let anyone tell you it is.
Old 23rd February 2013
  #23
justis
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I used to work at Guitar Center, and I can't say I've ever worked for a company that's worse than that place. Them going down the tubes is a huge reflection on how they treat their employees.
Old 23rd February 2013
  #24
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Quote:
Originally Posted by The Real MC View Post
Harmony Central changed their forum system last month. Absolutely horrid. Bain has ruined that website.
Mitt Romney personally designed that new look.
Old 23rd February 2013
  #25
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Quote:
Originally Posted by mcmike View Post
Mitt Romney personally designed that new look.
Since he wasn't elected president, he can finally go back to making beatz.
Old 23rd February 2013
  #26
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Quote:
Originally Posted by Thomas W. Bethe View Post
The only real bummer for students is that WalMart does not sell alcohol on Sundays so they have to stock up on Saturday.
What, no more trips to Johnny's or House of Sauce?
Man, I remember when the Feve first started serving beer. I seem to recall that some long-term residents of the town were not too happy about it.
How times have changed!
Old 23rd February 2013
  #27
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Quote:
Originally Posted by Thomas W. Bethe View Post
The only real bummer for students is that WalMart does not sell alcohol on Sundays so they have to stock up on Saturday.
I thought they would be too busy gallon smashing...
Old 24th February 2013
  #28
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Quote:
Originally Posted by justis View Post
I used to work at Guitar Center, and I can't say I've ever worked for a company that's worse than that place. Them going down the tubes is a huge reflection on how they treat their employees.
Look what happened to Circuit (Sh)ity - GC is headed that direction.
Old 24th February 2013
  #29
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Old 24th February 2013
  #30
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Thomas W. Bethe's Avatar
Quote:
Originally Posted by matyas View Post
What, no more trips to Johnny's or House of Sauce?
Man, I remember when the Feve first started serving beer. I seem to recall that some long-term residents of the town were not too happy about it.
How times have changed!
Johnny's has expanded but House of Sauce is ancient history. From a dry town to a town that has about 6 places serving alcohol and even Gibbson's Bakery sells wine by the bottle.

Things they are a changing....
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