New Leadership At Guitar Center

Mark Wein

Grand Poobah
Staff member
Just got this email from Music Trades:


New Leadership At Guitar Center
Former Sports Authority CEO Replaces Mike Pratt
In Wake Of Disappointing Financials

DARRELL WEBB HAS BEEN APPOINTED CEO of Guitar Center, replacing Mike Pratt, who resigned abruptly after 20 months on the job. Webb has more than 30 years of experience in retailing and has led several multi-billion dollar retailers through periods of rapid growth.
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New Guitar Center CEO Darrell Webb.
From 2011 to 2013 Webb served as chairman and CEO of The Sports Authority, Inc., a 475-store sporting goods retailer. Between 2006 and 2011 he was chairman, CEO, and president of Jo-Ann Fabric & Craft Stores, the largest fabric and craft retailer in the U.S., which had record earnings during his leadership. Prior to Jo-Ann, Webb spent more than 20 years with Fred Meyer, Inc. and The Kroger Company.
The leadership transition was accompanied by disappointing financial results at Guitar Center. According to several sources, the retailer's EBITDA (earnings before interest, taxes, depreciation, and amortization) declined to $18 million in the third quarter from $28 million for the same period a year ago. Quarterly revenues advanced 1.5% for the period to $528 million compared to $520 million a year ago. However, same-store sales for the period dropped 1.7%.
Guitar Center's bond holders reacted negatively to the news. In Monday trading, pricing on the 6.5% secured bonds dropped to $84.25 from $91.625. The bonds now yield 11.1%. Guitar Center's unsecured bonds took an even bigger hit, dropping to $62 from $72.5. They now offer a 15.5% yield.
"We would like to thank Mike Pratt for his service and welcome Darrell to the company," said David Kaplan, a member of Guitar Center's Board of Directors and co-founder and senior partner of Ares Management LLC, which recently acquired a controlling stake in Guitar Center from former owner Bain Capital. "Given Darrell's extraordinary track record of success in growing and leading large specialty retail companies, we are confident in his abilities to enhance Guitar Center's customer experience and further bolster the company's position as a world-class, omni-channel retailer in one of the most passion-driven retail categories. Since becoming the controlling shareholder of Guitar Center in April, Ares has supported a number of initiatives at the company that we believe will position Guitar Center for growth. We look forward to working with Darrell as he and the leadership team continue to advance these and other exciting initiatives at the company."
In a subsequent announcement, Guitar Center reported appointing Michael Amkreutz to executive vice president, marketing, merchandising, and e-commerce for the Guitar Center brand. Amkreutz will be responsible for all aspects of GC's product assortment, in-store merchandising, marketing campaigns, and e-commerce strategy.
Amkreutz joins Guitar Center from Systemax North American Technologies, where he most recently held the role of chief marketing officer. His expertise in marketing, merchandising, and technology, developed over the years at companies such as Sears, Newegg, Hannspree North America, and Sharp Electronics, made him the ideal choice for this critical role in the organization.
 
This part about Michael Amkreutz caught my eye:

His expertise in marketing, merchandising, and technology, developed over the years at companies such as Sears, Newegg, Hannspree North America, and Sharp Electronics, made him the ideal choice for this critical role in the organization.

I'm a bit of a dick for saying this but, when I think about marketing and merchandising success, these are not companies that immediately spring to mind.
 
as long as Gibson and Fender continue to be assclowns about what they THINK their products are worth......GC isn't going to do a lot better.
i've noticed over the last year or so....that GC has (in my town) increased the the quantity of the lower priced asian made products.....by a lot.

around here, the smaller stores all did this when gibson and fender jacked up their prices in the last decade and all of them are out of business.
you may sell some of these products to a bunch of kids, but you can't maintain a serious music business on them.

my 2 cents.
 
as long as Gibson and Fender continue to be assclowns about what they THINK their products are worth......GC isn't going to do a lot better.
i've noticed over the last year or so....that GC has (in my town) increased the the quantity of the lower priced asian made products.....by a lot.

I was just noticing that the other day at mine. There used to be a ton of Fender and Gibson, but now it seems like the Gibsons have been replaced with Epiphones and there are a ton of Ibanez. They also increased the Rics so that is one good thing.
 
I was just noticing that the other day at mine. There used to be a ton of Fender and Gibson, but now it seems like the Gibsons have been replaced with Epiphones and there are a ton of Ibanez. They also increased the Rics so that is one good thing.

and schecters and bc rich.....etc.
 
I was just noticing that the other day at mine. There used to be a ton of Fender and Gibson, but now it seems like the Gibsons have been replaced with Epiphones and there are a ton of Ibanez. They also increased the Rics so that is one good thing.

To be fair, Gibson discontinued every model with a non-gloss finish for the 2015 model year. So it's only reasonable that those spaces were taken by higher priced Epiphones.
 
Wow. One corporate dick pulls out and another slides right in.
I'm sure he'll be replaced with yet another when he can't figure out what to do either.
 
This part about Michael Amkreutz caught my eye:



I'm a bit of a dick for saying this but, when I think about marketing and merchandising success, these are not companies that immediately spring to mind.
Sharp is about the most successful out of those, and even then...
 
I'm a bit of a dick for saying this but, when I think about marketing and merchandising success, these are not companies that immediately spring to mind.

And the last guy came from Best Buy Canada. I think it’s safe to say GC isn’t willing to pay up for a great CEO.

They also increased the Rics so that is one good thing.

That makes me wonder if Ric has quietly expanded its production capacity. In late 2013 Ric was selling everything they made before they made it and popular models had to be back ordered. Guitar Center sold Rics, but they had to be ordered, none were in the stores. Now they’re on display!

Shuffling deck chairs on the Titanic.

Pretty much. The CEO can’t make the old debts go away. Nor can he make many major changes without spending a lot, and nobody is going to loan GC more money. At some point GC needs to declare Chapter 11 and focus on not getting buried in debt again. But it might be that the hedge fund that owns big chunks of Fender and GC is blocking that to keep GC from reneging on debt to FMIC and doing major damage in the process.
 
" Webb has more than 30 years of experience in retailing and has led several multi-billion dollar retailers through periods of rapid growth."

Anything positive to add? Like: He plays in a band on the weekends, Or: Worked in a music store, back in college.
 
This is likely the guy Ares wants, now that they own most of the company. The debt situation is done for now and the company is more liquid than at any time since Bain took control.
 
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