Achtung! Guitar Center is toast

They’ll be in a better position to come back after the pandemic if they don’t waste a bunch of money paying retail employees for services they are not legally allowed to provide during the pandemic.
 
OGG said:
I actually understand all of this and agree on the definitions etc.

I'm just saying that this on top of what has been their recent struggles will likely be the last straw. They might have every intention to bring everyone back and resume normal operations, but that doesn't mean they'll be in any position to do so. Indeed, they have no choice but to shutter their stores, but for how long is anyone's guess right now. I honestly don't see them getting the green light to reopen any time soon. I would not be surprised if it's two months or longer. With no cash reserves, no credit, and being about to die already before this crisis it's going to be a tall order. I don't think it even makes sense for them to try. Short of a massive bailout or forgiving of debts, they are in deep shit. My local store has been a joke for a couple of years as it is. The inventory is pathetic and mostly old, beat up junk. They have a skeleton crew working that are not exactly pros, they don't ever get current generation gear from anyone. If you want a current model of anything... you're SOL at that store. Even the main San Diego proper store has been that way more and more as the company has gotten deeper into failure.

They hardly had anything to offer a lukewarm buying public to begin with, I suspect that buying public will be much more frugal and particular when this thing blows over. There's going to be far less disposable income to spread around. That's going to affect every retailer for sure, but some much more than others.

I just don't see their viability going forward.

Whether the furloughs are simply protocol or not isn't the point really. If anything it's just keeping them in line with what's expected/required, and will work in their favor when the inevitable BK is filed. They aren't coming back to what they were before this. There's not a chance in Hell.

I could be wrong. They've surprised me before. This situation is unlike anything we've seen before though and a lot of businesses are going to be relegated to history by it. That's the sad reality. If this is the end of the road for them, they'll be stuck in a traffic jam on the way there. They'll have lots of company.
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I'm not trying to argue with you, I juts think you are looking at this from the wrong prospective. I also don't think that the economy is going to tank. In my opinion there is no fundamental issue with the economy at all. You just can't work. Once things reopen, I believe there will be a lot of pent up demand. Despite what people trying to get ratings on the news would have us believe, the world is not ending. This will pass and everything will be fine. There my be a few business that close but I don't think it will be drastic. Most companies were in a very good position goin into this'd provided they are smart and take advantage of their options they will be fine.
 
reverend1 said:
I'm not trying to argue with you, I juts think you are looking at this from the wrong prospective. I also don't think that the economy is going to tank. In my opinion there is no fundamental issue with the economy at all. You just can't work. Once things reopen, I believe there will be a lot of pent up demand. Despite what people trying to get ratings on the news would have us believe, the world is not ending. This will pass and everything will be fine. There my be a few business that close but I don't think it will be drastic. Most companies were in a very good position goin into this'd provided they are smart and take advantage of their options they will be fine.
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All good brother. I hope you're right too.
 
I don't think we have Guitar Center in Canada. Maybe in the largest cities only? I think I may have been in one in Calgary one time 20 years ago.

Anyway, we do have Long & MacQuade...they are the biggest place for music gear in Canada and the Gibson distributor as well as all things Yorkville (Traynor). They get the flak for being huge and knocked for some of the typical things that the biggest places take heat for but generally provide good service and selection.
 
OGG is right. We've had these threads before, and I've tried to explain how "going private" works. Especially with the people who have taken GC private, as I once worked for one of the companies they "took private."

The key phrases in that article are "low cash flow" and "high leverage."

In the plainest language, this means that GC owes a shitload of debt payments, and doesn't take in enough cash to make those payments. That has nothing to do with COVID, and hasn't really, since the leverage was put in place.

This type of private equity move is so disgusting, unethical and plain wrong that most folks can't accept that it's real. Plainest way to explain:
Step 1: I loan GC waaaaaaaaaaaay more money than they can repay, on terms unfriendly to them.
Step 2: GC (actually, me and my buddies on the board) take that new lump of cash and pay ourselves.*
Step 3: GC then "tries mightily" to pay that debt off. SPOILER: they don't. It wasn't possible.
Step 4: Assets are sold, bankruptcies declared. Whether business stays open or not, largely immaterial as almost all employees are either let go or now paid pennies on their former dollar incomes.

This has happened over, and over, and over, and Americans just refuse to learn about it, bcos having too much fun.

Meanwhile, board members and the PE players walk off with tens of millions (or more, depending).

This has nothing - NOTHING - to do with guitar sales or furloughed staff.
 
Danhedonia said:
OGG is right. We've had these threads before, and I've tried to explain how "going private" works. Especially with the people who have taken GC private, as I once worked for one of the companies they "took private."

The key phrases in that article are "low cash flow" and "high leverage."

In the plainest language, this means that GC owes a shitload of debt payments, and doesn't take in enough cash to make those payments. That has nothing to do with COVID, and hasn't really, since the leverage was put in place.

This type of private equity move is so disgusting, unethical and plain wrong that most folks can't accept that it's real. Plainest way to explain:
Step 1: I loan GC waaaaaaaaaaaay more money than they can repay, on terms unfriendly to them.
Step 2: GC (actually, me and my buddies on the board) take that new lump of cash and pay ourselves.*
Step 3: GC then "tries mightily" to pay that debt off. SPOILER: they don't. It wasn't possible.
Step 4: Assets are sold, bankruptcies declared. Whether business stays open or not, largely immaterial as almost all employees are either let go or now paid pennies on their former dollar incomes.

This has happened over, and over, and over, and Americans just refuse to learn about it, bcos having too much fun.

Meanwhile, board members and the PE players walk off with tens of millions (or more, depending).

This has nothing - NOTHING - to do with guitar sales or furloughed staff.
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You forgot:

Step 5 - A PE firm buys it out of bankruptcy.

Step 6 - Spins off the new GC as a “separate entity”.

Step 7 - Repeat Steps 1-4.

Or something like that.
 
Yeah, I honestly haven't forgotten that - because I lived it for about 3 years. I would love to name names (because you could Google it, and it's quite the tale) but I feel like the one day in my life I least fucking need it I'll be served by some douchebag's $600/hr lawyer if I simply tell the truth here.

I will, however, tell you this: when everyone in a very large corporation is aware that the 'new management' has looted the till, and is about to declare bankruptcy, and then are actually dumb enough to circulate a video to the entire corporation with tons of body language that indicates lying, like nose-touching and inability to look at the camera, shaky voice, etc., ... well, the conversations with colleagues were priceless.

"Hey, look at 4:18 - he can't even say 'pension' without coughing" ... (yes, the pension fund, funded by decades of employees' earnings was raided).

Private equity became just one more tool in the robber baron arsenal. These people are so corrupt.
 
I tried to draw the distinction that GC wasn't toast BECAUSE of Coronavirus, but that the virus and it's resulting lockdown were likely the end of the road. It's been only a matter of time before they crashed for quite a while now and I'm shocked they lasted this long.

Based on today's events regarding the lockdown, it looks like middle of May before they could even begin to reopen. I'd be willing to bet that June or July are more realistic reopening targets. That means anywhere upwards and beyond 3 months of back rent, overhead etc, and virtually zero cash flow.

If they somehow managed to pull off reopening their stores after this it will raise some seriously disturbing questions. First and foremost being where did the money come from when you couldn't pay your bills before?

I still hope I'm wrong, but I doubt it.
 
Danhedonia said:
Yeah, I honestly haven't forgotten that - because I lived it for about 3 years. I would love to name names (because you could Google it, and it's quite the tale) but I feel like the one day in my life I least fucking need it I'll be served by some douchebag's $600/hr lawyer if I simply tell the truth here.

I will, however, tell you this: when everyone in a very large corporation is aware that the 'new management' has looted the till, and is about to declare bankruptcy, and then are actually dumb enough to circulate a video to the entire corporation with tons of body language that indicates lying, like nose-touching and inability to look at the camera, shaky voice, etc., ... well, the conversations with colleagues were priceless.

"Hey, look at 4:18 - he can't even say 'pension' without coughing" ... (yes, the pension fund, funded by decades of employees' earnings was raided).

Private equity became just one more tool in the robber baron arsenal. These people are so corrupt.
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This is precisely why I am so against government bailouts of companies like Boeing. When small business go under, the never come back, the owners lose their jobs, and sometimes even take their own lives. When Boeing goes bankrupt, equity funds like Blackrock lose money, so their principals maybe have to put off that yacht. The C-suite boys take their golden parachutes. However, the company itself declares bankruptcy, reorganizes, and goes back into business. That's why I've never understood the 'too big to fail' thing. It's a lie.
 
bsman said:
This is precisely why I am so against government bailouts of companies like Boeing. When small business go under, the never come back, the owners lose their jobs, and sometimes even take their own lives. When Boeing goes bankrupt, equity funds like Blackrock lose money, so their principals maybe have to put off that yacht. The C-suite boys take their golden parachutes. However, the company itself declares bankruptcy, reorganizes, and goes back into business. That's why I've never understood the 'too big to fail' thing. It's a lie.
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Like the Easter Bunny.
 
bsman said:
Not being Christian, I’ve always wondered, what’s the deal with the rabbit? I mean I get the egg - it’s cause Jesus hatched on Easter, but the bunny mystifies me...
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Oestra was a pagan goddess of Spring, and was symbolized by a rabbit. Christians adopted the pagan symbols of the medieval Germanic tribes to get them to convert. Hence, the Easter Bunny.
 
And Boeing...the execs drive up the prices of the stock by doing buybacks and let some of their shares go when they are up in price.

These sleazes are the reason that almost everything is made in 3rd world countries...so they could have more. 600 billionaires in the USA. Some say "you are free to be one if you really want to be and work hard". Not really...a few will make it and good fortune is a huge part of it too but the system is set up for the rich to succeed and the richer to succeeder while the working stiff gets stiffer.

And yes, 'succeeder' will be in next year's Oxford Dictionary.
 
Help!I'maRock! said:
Oestra was a pagan goddess of Spring, and was symbolized by a rabbit. Christians adopted the pagan symbols of the medieval Germanic tribes to get them to convert. Hence, the Easter Bunny.
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Good thing we didn't name it after an Egyptian goddess or we'd have the Easter Crocodile.
 
bsman said:
Not being Christian, I’ve always wondered, what’s the deal with the rabbit? I mean I get the egg - it’s cause Jesus hatched on Easter, but the bunny mystifies me...
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I’m not religious at all. My parents never took me to church and I had no idea what Easter was until I was in college and my girlfriend (now my wife) said she was going to Easter service with her roommates. I asked her why people go to church on Easter and she thought I was kidding. After she realized I wasn’t joking, she told me what it was. I called my dad and asked why he never told us about Easter and he said he did, a bunny goes around pooping chocolate eggs :grin:
 
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