Report: Guitar Center is Facing “Serious Risk of Bankruptcy”
Iconic guitar manufacturer Gibson isn’t the only company in the musical instruments industry staring down serious financial trouble: a new report from Digital Music News indicates that Guitar Center, the biggest instrument retailer in the United States with more almost 280 locations, is in “serious risk of bankruptcy.”
Rumors of Guitar Center’s demise have swirled around the retailer since at least 2014, and in 2015 the chain laid off 180 corporate employees while posting big monetary losses.
While the retailer has managed to hang on since then, S&P recently downgraded Guitar Center’s rating to ‘CCC—’, indicating “serious risk of bankruptcy,” while Moody’s insisted the company is solvent despite more than $1 billion in outstanding loans. Guitar Center just completed an “emergency loan renegotiation” for $615 million of that debt to remain open.
I repeat, for emphasis: Guitar Center currently has more than $1 billion in outstanding loans.
The fate of both Gibson and Guitar Center is inextricably linked, with the steep decline of guitar sales in recent years being the biggest problem facing both. Guitar sales have dropped from approximately 1.5 million per year to 1 million over the past decade, with younger musicians gravitating towards genres that don’t utilize the guitar (or use it less than rock music).
Read more at Digital Music News.