You know the words to this one. Guitar Center filed for chapter 11 bankruptcy on Saturday evening, days after sharing it had secured restructuring financing.
Familiar melody: Pre-pandemic, Guitar Center racked up $1.3 billion in debt following a private equity buyout. It also lost ground to online leaders like Amazon—despite being the largest musical instruments retailer in the U.S.
- Covid-19 sealed its fate: Local officials didn’t consider fresh guitar picks essential goods, meaning spring store closures reversed Guitar Center’s recent sales upswing.
New harmony: Unlike with other 2020 bankruptcies, shoppers won’t see the cost-cutting measures in action. Guitar Center will use its fresh financing to whittle down its debt.
- It’ll still meet outstanding financial obligations, including payments to its roughly 10,000 employees. No layoffs have been announced.
- The company is “pleased” with its store footprint, but it’s hired A&G Realty Partners for a second opinion.
Looking ahead...Guitar Center expects to exit bankruptcy by the end of the year. It could be one of the lucky ones: Retail experts anticipate an uptick in Chapter 11 filings after the holiday season.
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