Guitar Center and how not to respond to a viral blog post

Eric Garland Greatest Hits, Guitar Center 12 Comments

The way Guitar Center has responded to a simple blog post going viral is going to go down in business textbooks – but not the way they are hoping.

Two weeks ago I was a good, regular customer of theirs, albeit one who wrote a brief piece about how big box, mass-market retail was in trouble.

This week, my article went viral, gaining 100,000 visitors in a couple of days. I caught their marketing department in the comments section pretending to be a third party while their official corporate HQ simultaneously reached out for a “friendly” chat. Their employees are sending abusive messages. Yesterday, their CEO actually came to the comments section of my Facebook page and this blog to claim that none that bad stuff (which caused Standard & Poors to call their bond rating “junk”) is true and big boxes are awesome and that I didn’t do a sufficient job researching his company’s position before writing on my personal blog.

Executives from Guitar Center’s vendors and competitors alike are flooding my inbox with stories how this company treats the marketplace. None of these stories are glowingly positive. The best any has said is “I am afraid they might take out some decent companies if they went belly up.”

Last night, at the “request” of the CEO himself to do a proper job of analysis, I teamed up with financial analysts to have a look at the 10-Q statements from the last couple of quarters. I am *astonished* that any company in their financial position would spend time screwing around in the comments section of a website, claiming that everything was fine. Guitar Center had to declare a $360,000,000 loss last quarter, a revision of its goodwill, because in their own words they aren’t convinced that they will achieve their historical performance going forward. And they absolutely have to grow their income since they have over $1 billion in long-term debt, all of it financed for massive payments in two or three years. They had just $26 million in the bank at the end of September. It’s a financial wreck – and that’s what they admit to the SEC. Imagine what people actually know.

And all the while, Bain Capital is making fees for their “management.”

On November 26, I made a quick blogpost about retail as everyone was cooking turkey. I used a single news piece as the feedstock for a riff on the big picture. But seeing how Guitar Center reacted to this, it is a much bigger story than I imagined.

In ten years, this may be a business case students have to study.