Music Trades April 2012 : Page38

Retail Jim DeStafney, owner of Blues Angel Music stands in front of his ‘Bass Wall’ follow-ing the grand opening of his new location. (Photo by Ed Barker) NEWS, HAPPENINGS, AND ANALYSIS FROM THE FRONT LINES to believe that 15 years later I’d have 18 employees and a new location that’s 14,000 square feet of full-line music store.” Keeping a small business thriving in today’s economy can be more than a challenge, but DeStafney credits his success to leveraging social media and internet sales with a brick-and-mortar storefront, and to embracing opportuni-ties. This is the 15th straight year with Guitar Center Debt Downgraded, Capital Structure “Unsustainable” MOODY’S INVESTORS Service has downgraded Guitar Center’s liquidity rating to Speculative Liquidity Grade-3 (SLG-3) “adequate” from SGL-2 “good.” The downgrade is due to the fact that the retailer’s cash flow is currently not sufficient to cover its interest expense, and that Moody’s does not anticipate significant improvements in business performance over the next 12 months. Guitar Center, which has approximate-ly $1.6 billion in outstanding long-term debt, currently has sufficient cash on hand to fund operations and will not have to make significant debt repay-ments until April 2013 when $135 mil-lion is due. The next debt maturity is not until February 2016. However, Moody’s analysts write, “Guitar Center’s capital structure is unsustain-able over the long term at its current levels of operating performance.” The downgrade takes into consideration Guitar Center’s highly recognized brand name and the fact that the com-pany is the largest customer for many musical instrument manufacturers. The downgrade also acknowledges that Guitar Center’s performance will contin-ue to improve but that interest cover-age will remain weak. Expanded Location Marks 15 Years Of Growth At Blues Angel DESPITE POURING RAIN THAT lasted all day, the grand opening of the new 14,000-square foot Blues Angel Music location in Pensacola, Florida was a tremendous success. More than 1,000 visitors braved the inclement weather to visit the store. The event marked the third time Jim DeStaffney’s Blues Angel Music has moved into larg-er quarters. The new store was the for-mer location of Harris Music and Sound/Play Hard Music. Attending the grand opening of the new location were several manufactur-ers’ representatives, including Fred Gretsch III, president of the legendary Gretsch guitar company that has been supplying musicians including George Harrison, Neil Young, and Brian Setzer for more than 125 years. “Although Blues Angel might not sell as many of our instruments as the online retailers or big-box stores, they provide personal recommendations, service, and instruction, which the other stores can’t,” said Gretsch. “Local small busi-nesses with the personal touch have been very important to the Gretsch name throughout our history.” Curt Mangan of Curt Mangan Strings was also representing his products at the Blues Angel grand opening. Mangan sells only through independent retailers. “It’s the independent retailers that pio-neer everything,” said Mangan. “Stores like Blues Angel are responsible for my success. They tell the story of Mangan strings; everything about the guitar is about finding that sweet spot. Fully 50 percent of Blues Angel’s string sales are Mangan.” “When we opened in 1997 on Navy Boulevard. it was just me in a 1,000-square-foot one-man guitar shop,” said DeStafney. “I was even a party DJ on weekends to make ends meet. It’s hard MUSIC TRADES APRIL 2012 38

Blues Angel Opens Expanded Store

Expanded Location Marks 15 Years of Growth At Blues Angel<br /> <br /> DESPITE POURING RAIN THAT lasted all day, the grand opening of the new 14,000-square foot Blues Angel Music location in Pensacola, Florida was a tremendous success. More than 1,000 visitors braved the inclement weather to visit the store. The event marked the third time Jim DeStaffney's Blues Angel Music has moved into larger quarters. The new store was the former location of Harris Music and Sound/Play Hard Music.<br /> <br /> Attending the grand opening of the new location were several manufacturers' representatives, including Fred Gretsch III, president of the legendary Gretsch guitar company that has been supplying musicians including George Harrison, Neil Young, and Brian Setzer for more than 125 years.<br /> <br /> "Although Blues Angel might not sell as many of our instruments as the online retailers or big-box stores, they provide personal recommendations, service, and instruction, which the other stores can't," said Gretsch. "Local small businesses with the personal touch have been very important to the Gretsch name throughout our history."<br /> <br /> Curt Mangan of Curt Mangan Strings was also representing his products at the Blues Angel grand opening. Mangan sells only through independent retailers. "It's the independent retailers that pioneer everything," said Mangan. "Stores like Blues Angel are responsible for my success. They tell the story of Mangan strings; everything about the guitar is about finding that sweet spot. Fully 50 percent of Blues Angel's string sales are Mangan."<br /> <br /> "When we opened in 1997 on Navy Boulevard. it was just me in a 1,000- square-foot one-man guitar shop," said DeStafney. "I was even a party DJ on weekends to make ends meet. It's hard to believe that 15 years later I'd have 18 employees and a new location that's 14,000 square feet of full-line music store."<br /> <br /> Keeping a small business thriving in today's economy can be more than a challenge, but DeStafney credits his success to leveraging social media and internet sales with a brick-and-mortar storefront, and to embracing opportunities. This is the 15th straight year with double-digit growth; last year the store grossed $1.6 million and this year will sell its 10,000th guitar.<br /> <br /> "Just opening the door and expecting folks to walk in and buy something wouldn't have let me last very long," added DeStafney. "I think the key to our business model has been that we offer services as well as product lines. Internet sales are strong and our Facebook page is constantly updated with sales and performance updates. Lessons are a big part of it too. We not only sell the instruments; we teach students to play. "<br /> <br /> Blues Angel offers new and used instruments and band instrument rentals, including repair and customization services for guitars and amplifiers. "Offering used instruments and taking trade-ins gives us a lot of flexibility in a down economy," added DeStafney. "Instead of having to pay over $1,000 cash for a new guitar, they can trade in their old guitar or buy a used one that's in great shape and has been checked out by our techs."<br /> <br /> In addition to sales, services have added significantly to Blue Angel Music's bottom line. "One of our biggest growth areas has been the repair of guitars, amplifiers and sound equipment," said DeStafney. "It's easy to find a vintage guitar or amp on the internet, but if it arrives damaged or breaks, what do you do then? Finding a need and filling it has been an important part of our growth."<br /> <br /> DeStafney is not only a guitar lover and music store owner; he is a musician as well, playing as "George Harrison" in "Not Quite Fab," a Beatles tribute band playing in shows around Pensacola, including the popular "Bands on the Beach." For every performance, each member dresses the role, decked-out in gray suits, wigs and boots, and affecting a perfect British accent. Not Quite Fab was one of the many live acts that played during the grand opening celebration.<br /> <br /> "In the band we use the same kinds of instruments to get that trademark Beatles sound," said DeStafney. "Having the exact equipment, striking the first chord from "Hard Day's Night"–the audience doesn't have to guess what we're playing. Owning a store that specializes in vintage equipment didn't hurt."<br /> <br /> As part of the grand opening, Blues Angel Music held a charity raffle, with 100% of the proceeds equally split between the American Red Cross and the USO. Raffle items consisted of numerous instrument donations from the store's vendors, and included a Gretsch George Harrison signature guitar valued at $5,000.<br /> <br /> "I think it's very important for businesses to be a part of the community and give back," said DeStafney. The raffle netted nearly $9,000 for the Red Cross and USO."<br /> <br /> DeStafney, a former fighter pilot and technical advisor for the movie Top Gun chose the music business over flying for the airlines when he retired in 1997 and hasn't looked back. As the business has grown, it has become more than just a post-retirement job for DeStafney.<br /> <br /> "My customers have become my friends and my employees have become family," he said. "I'm hoping this new location will serve us all well and continue to help us grow. It will be interesting to see what the next 15 years will bring."<br />

Guitar Center Opens Two Stores Despite Debt Downgrade

Guitar Center Debt Downgraded, Capital Structure "Unsustainable"<br /> <br /> MOODY'S INVESTORS Service has downgraded Guitar Center's liquidity rating to Speculative Liquidity Grade-3 (SLG-3) "adequate" from SGL-2 "good." The downgrade is due to the fact that the retailer's cash flow is currently not sufficient to cover its interest expense, and that Moody's does not anticipate significant improvements in business performance over the next 12 months.<br /> <br /> Guitar Center, which has approximately $1.6 billion in outstanding long-term debt, currently has sufficient cash on hand to fund operations and will not have to make significant debt repayments until April 2013 when $135 million is due. The next debt maturity is not until February 2016. However, Moody's analysts write, "Guitar Center's capital structure is unsustainable over the long term at its current levels of operating performance." The downgrade takes into consideration Guitar Center's highly recognized brand name and the fact that the company is the largest customer for many musical instrument manufacturers. The downgrade also acknowledges that Guitar Center's performance will continue to improve but that interest coverage will remain weak. <br />

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