Is Guitar Center Hanging By A String?

Centre of Tallahassee
One Of Guitar Center's More Than 250 Locations, This One In Tallahassee, Fla.

Could the world's largest instrument retailer be ready to sing bye bye, Miss American Pie?

That may indeed be the case for Guitar Center. The S&P recently reduced the retailer's corporate credit rating further into junk status. S&P does not see the retailer — with more than 250 stores across the U.S. — improving its credit metrics given high leverage and weak cash flow, especially as more than $600M in notes mature in April of next year, according to MarketWatch.

Guitar Center remains in operation, just on a watch list with a host of other retailers in precarious positions. That means the retailer is susceptible to any shocks, including a recession or a sharper drop in guitar sales, Digital Music News reports. Lower guitar sales are also the source of guitar-maker Gibson's tribulations. Gibson is saddled with more than $500M in debt coming due this summer.

“In both cases, these businesses have been unable to adapt to a precipitous slide in guitar sales. Younger buyers, who once drove the guitar surge, have now shifted towards [Electronic Dance Music], rap, and less guitar-driven indie music — even though interest in music itself has never been higher,” Digital Music News reports.

The company has not announced any store closures; it recently announced a new store in Delray Beach, Florida, and a revamped store in Bloomington, Minnesota.

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