Well, it appears that things aren’t looking too good for Guitar Center.
According to a new report, the company is possibly preparing to file for bankruptcy as early as late November 2020.
Obviously, this year has been hard on everyone for a number of different reasons. In particular, retailers have faced various setbacks and financial problems due to the coronavirus pandemic.
Over the past few months, Pier 1 Imports, J. Crew, True Religion and JCPenney are just a few retailers who have either been sold to other companies or filed for bankruptcy in 2020. Now, it looks like Guitar Center may be joining the ever-growing list.
According to the New York Times, Guitar Center failed to pay an interest payment of roughly $45 million earlier this month. Currently, the retailer has a 30-day grace period to make the payment or it could end in default, resulting in bankruptcy.
Guitar Center may be America’s largest instruments retailer, but that hasn’t stopped its growing financial problems in 2020. The report further says that Guitar Center has reached out to creditors to discuss its options which could involve filing for bankruptcy by the end of the year. If the company does so, Guitar Center hopes to recover financially in early 2021.
Guitar Center has managed to avoid bankruptcy once already this year. Back in April, the retailer resolved a skipped interest payment that impacted its credit rating. According to the credit ratings agency Moody’s, the transaction did not “fundamentally change” the company’s “untenable” capital structure. However, it was the third cut in Guitar Center’s credit rating this year.
Prior to the coronavirus pandemic, the retailer was reportedly doing well. According to the New York Times, the company reported 10 consecutive quarters of sales growth until the end of February before the pandemic hit.
Guitar Center, which has been around since 1959, has 300 stores nationwide. In its most recent fiscal year, the retailer generated about $2.3 billion in sales. However, according to Moody’s, it now has about $1.3 billion in debt.
Have you been to Guitar Center recently? What are your thoughts on the company potentially filing for bankruptcy? Let us know in the comments below.