Like many other retailers this year, music store chain Guitar Center has struggled due to coronavirus shutdowns and reduced foot traffic.
They’ve managed to grow their online business, but overall, they’ve taken a big financial hit and now have filed for Chapter 11 bankruptcy.
Here’s what you need to know:
Guitar Center is bankrupt, but not going out of business.
Guitar Center reported two-and-a-half years of growth before COVID-19, so now they’re just trying to get back on track.
The bankruptcy filing allows the largest musical instrument retailer to reduce debt by nearly $800 million and get access to $165 million in cash.
They will probably close a few stores.
We say “probably” because they haven’t announced any closures, and Guitar Center said they’re “pleased” with their 300-store chain.
But they said in a press release that they’ve hired a real estate firm to investigate their options “to optimize [their] their real estate portfolio and other agreements.”
We’ve seen many chains who have filed for bankruptcy this year terminate lease agreements and close down stores to improve their bottom line.
If there are store closures, look for modest liquidation sales.
Since we don’t expect many stores to close, any liquidation sales would be minimal, since Guitar Center would likely ship many of their products to other locations.
We’d most likely see price cuts on pre-owned instruments and gear.
Check out our rules for shopping liquidation sales to prepare yourself.