Industry News

More Bad News for Sears and Gibson

We’ve previously written about the sad, seemingly-inevitable  decline of Sears. While it does not directly affect the audio biz, it certainly does affect the retail climate of America.

For many years, Sears was the world’s largest seller of major appliances, and the Whirlpool brand was a major part of that dominance —for over 100 years. That relationship is coming to an end, apparently due to the combination of Sears’ reduced sales volume and decreased credit-worthiness. The details can be found here and here.

Further evidence of Sears’ decline comes from the report that the company burned through $200M in loans in just the last month. Additionally, Sears Holdings just announced that 63 more Sears and Kmart stores will close after the first of the year—this on top of 332 stores closed, or soon to close, in 2017.

As it has for several years, the question remains: how long can this continue?

We’ve also previously written about Nashville-based Gibson Brands, whose mindbogglingly-broad holdings include several musical instrument companies including Gibson Guitars, and a number of companies in both pro and consumer audio, including Cerwin Vega, Stanton, a majority share of TEAC/Esoteric, and a sizable piece of Onkyo.

In August, credit-rating bureau Moody’s downgraded Gibson’s credit rating from Caa2 to Caa3 (Moody’s: “Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk”), based upon increased concerns that the company would be unable to make payments on notes totaling over half a billion dollars.

Memphis media recently reported that Gibson had put its 127,000 square foot factory near Beale Street up for sale. Gibson’s statement that the Memphis division  “is growing and achieving record profitability and sales levels” seems disingenuous in view of the property offering. Also this last week, Gibson’s ownership position in Onkyo was reported to have been reduced.

As in the case of Sears, it’s hard to imagine a happy ending to this story.

Gibson’s factory in Memphis, Tennessee.