- Guitar Heart, the biggest musical instrument retailer within the US, has filed for chapter.
- The corporate introduced Saturday it was getting into the Chapter 11 restructuring course of, throughout which it’s going to keep in enterprise. Guitar Heart stated it expects to complete up the method by the top of the yr.
- Like different bodily retailers, Guitar Heart has felt the unfavourable impacts of shoppers’ rising reliance on e-commerce, in addition to the pressured closures of a lot of its shops in the course of the coronavirus pandemic.
Guitar Heart, the biggest retailer for musical devices within the US, is the newest firm to file for chapter within the wake of the coronavirus pandemic.
The retailer announced Saturday it had filed for Chapter 11 chapter safety “to considerably cut back our debt and improve our capacity to reinvest in our enterprise.” Guitar Heart goals to emerge from chapter earlier than the top of the yr, the corporate stated.
The potential of Guitar Heart’s chapter submitting was first reported in October by Bloomberg.
In accordance with the corporate’s chapter filings, Guitar Heart has been pressured to hunt safety partially as a consequence of “the financial upheaval created by the persistence of the Covid-19 pandemic.” The corporate additionally faces a “vital debt burden” standing at roughly $1.3 billion in debt, the New York Times reports.
Guitar Heart is among the retailers hit onerous by the coronavirus pandemic: The retailer told the New York Times in March it had closed 75% of its shops throughout nationwide lockdowns. Social-distancing efforts and stay-at-home measures have pressured storefronts throughout the US not deemed important companies to quickly shut.
With almost 300 storefronts throughout the US, Guitar Heart closely depends on in-person gross sales to remain afloat. Though the corporate has a web based retailer for buying musical devices, it has been pressured to supply options — like digital music classes — in the course of the pandemic to attempt to reverse its financial downturn.
In accordance with its chapter submitting, Guitar Heart stated it had secured $165 million in new fairness investments, and intends to cut back its debt by $800 million. The corporate will proceed to pay its workers and function its storefronts as regular in the course of the Chapter 11 course of, Guitar Heart stated.
Guitar Heart will not be the one retailer to need to file for chapter in the course of the pandemic. Each Century 21 and Lord & Taylor filed for chapter this yr, and made the choice to exit of enterprise and shut their storefronts. Different retailers like Muji, Brooks Brothers, JCPenney, and Pier 1 have additionally filed for chapter in latest months.