Black Collar Workers

Report: Guitar Center Loses $11 Million, Fired 100+ More Employees Than Originally Reported

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Guitar CenterIs this the end for Guitar Center? It’s increasingly looking that way.

Earlier this month, our sister site, Gear Godsreported that the chain of instrument retailers were recently forced to layoff forty employees from their corporate headquarters. Now, in a follow-up article, Gear Gods reports that a second wave of firings have left roughly 140 more corporate employees without jobs, bringing the total to somewhere in the vicinity of 180 laid-off workers:

“One former employee who was part of this most recent round of layoffs and who spoke to Gear Gods on the condition of anonymity tells us that Guitar Center is now a ‘company run by non-music people,’ and that after the firings, our subsequent coverage, and Garland’s grim predictions, it’s a madhouse at their corporate HQ in Westlake.

“According to sources, ‘no one’s job is safe,’ not even some of the most senior people at the company. The first major firing of these was Gene Joly, the former president of Musicians Friend and well-respected music industry professional, who was let go two days before Christmas. Others include heads of several divisions in the company, including the vice president of GC Pro, Guitar Center’s Gear/Advice/servicing branch. The thing is, guys like Joly are among the top individual account earners for Guitar Center, so these firings would appear to be less about making money than plugging every single cash-hole in Guitar Center’s ship.”

And it gets worse:

“Guitar Center’s secured bonds have been tanking since last July, and are taking a pretty consistent hit each day, according to data from the Financial Industry Regulation Authority. Just yesterday investors pulled $11 million out of the company, the kind of hit that is highly abnormal in this sort of bond market. It’s too early to call this a ‘run’ on GC’s bonds, but it sure looks like a heck of a lot of people are starting to jump ship. And of course, once word starts to go around that the company’s not looking so hot, and that it’s a mess at the highest rungs of power, and then one investor pulls out… well, then another one pulls out, and then another, and another, and another, and another.”

As MetalSucks’ own Vince Neilstein recently noted, Guitar Center accounts for 28% of musical instrument sales in the U.S. — so the fact that it may very well be forced to shutter at some point in the not-too-distant future is a big, big deal.

Read all of Gear Gods’ special report here.

 

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