New CEO At Guitar Center
...several multi-billion dollar retailers through periods of rapid growth. From 2011 to 2013 he served as chairman and CEO of The Sports Authority, Inc., a 475-store sporting goods retailer. Between 2006 and 2011 he was chairman, CEO, and president of Jo-Ann Fabric & Craft Stores, the largest fabric and craft retailer in the U.S., which had record earnings during his leadership. Prior to Jo-Ann, Webb spent more than 20 years with Fred Meyer, Inc. and The Kroger Company.
The leadership transition was accompanied by disappointing financial results at Guitar Center. According to several sources, the retailer’s EBITDA (earnings before interest, taxes, depreciation, and amortization) declined to $18 million in the third quarter from $28 million for the same period a year ago. Quarterly revenues advanced 1.5% for the period to $528 million compared to $520 million a year ago. However, same-store sales for the period dropped 1.7%.
Guitar Center’s bond holders reacted negatively to the news. In Monday trading, pricing on the 6.5% secured bonds dropped to $84.25 from $91.625. The bonds now yield 11.1%. Guitar Center’s unsecured bonds took an even bigger hit, dropping to $62 from $72.5. They now offer a 15.5% yield.
“We would like to thank Mike Pratt for his service and welcome Darrell to the company,” said David Kaplan, a member of Guitar Center’s Board of Directors and co-founder and senior partner of Ares Management LLC, which recently acquired a controlling stake in GC from former owner Bain Capital. “Given Darrell’s extraordinary track record of success in growing and leading large specialty retail companies, we are confident in his abilities to enhance Guitar Center’s customer experience and further bolster the company’s position as a world-class, omni-channel retailer in one of the most passion-driven retail categories. Since becoming the controlling shareholder of Guitar Center in April, Ares has supported a number of initiatives at the company that we believe will position Guitar Center for growth. We look forward to working with Darrell as he and the leadership team continue to advance these and other exciting initiatives at the company.”
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