GC has a number of problems, not all of its making. One is that it carries a huge amount of debt as a result of the Bain deal, currently owing over $1.18 billion (yes, that's with a b). That's a lot of interest it's paying on the debt service (just think of what you pay on your credit card every month), plus it seems to have a $953 million(!!) balloon payment coming up in 2017 that's really going to stretch the company's finances to its limits.
Then there's the fact that the employees in some cities have tried to unionize, which has not only sent chills through company management, but has caused (along with other factors) the company's bonds to fall to junk status. GC tried to counter by giving its employees an extra $1.25 an hour, but that hardly seems enough to appease its poor abused workers.
Then there's the fact that GC's earnings have been essentially flat despite the upturn in the economy. Much of that has to do with the fact that GC's biggest competitor is the Internet, with musicians purchasing from Amazon, Sweetwater or even GC's own Musician's Friend. Anyone who's tried to buy something at GC knows that the process can be long and painful regardless of the size of the order, compared to the quick and easy online experience.
The big box store concept that we used to love so much has fallen on our collective disfavor lately, so we no longer look at GC as that mecca where we can see and try things not found in our local mom and pop store. Like in all parts of tech, when all things are equal, convenience always wins. With the relative commodity nature of music and audio gear these days (even with cheaper guitars and stringed instruments), we no longer have to try before we buy in many cases. We're winners when that happens, but Guitar Center may end up being the big loser.
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