Over the last couple of years I’ve outlined the struggles of Guitar Center, and to be frank, I’m surprised that the company is still around in its current form. That said, it appears to be on its last legs ever since its credit rating was lowered to a level that makes it almost impossible for the company to borrow or change the terms of its massive loans.
Standard & Poors now rates Guitar Center at CCC-, which equates to “Default imminent with little prospect for recovery.” It’s not the lowest rating level, but it’s clearly a shot in the heart to the company’s financial survival.
It’s almost inevitable that GC is going to change its form or even cease to exist sometime in the future. That actually might be better for the entire industry as a new stream of mom and pop retails fill the void, and we go back to the good old fashioned local music store again.
Check out the following short video that explains what’s happening.