Gibson Brands Inc., the 100+ old iconic guitar maker, faces possible bankruptcy in the next few months. Sparking concern for the guitar manufacturer is the departure of the company’s chief financial officer, Bill Lawrence. To meet its financial obligations coming due in July, Gibson is selling its Baldwin piano brand and has left its long time warehouse in Nashville.
Henry Juszkiewicz, CEO and majority shareholder, blames music store retailers for much of its woes. “There are problems with the guitar retail industry,” he said. “All of the retailers are fearful as can be; they’re all afraid of e-commerce, with Amazon just becoming the second largest employer in the U.S., and the brick and mortar guys are just panicking. They see the trend, and that trend isn’t taking them to a good place, and they’re all wondering if there will be a world for brick and mortar stores for much longer. It’s a turbulent world to be a retailer, and many of our retail partners are facing that same issue.”
Beyond the issue of failing retailers, Gibson has had to deal with a number of public relations problems in the recent past. Back in 2012 Gibson paid steep fines associated with criminal allegations for violating the Lacy Act, as a result of a raid on their warehouse, where the FBI found illegal shipments of wood from Madagascar. Responses to the latest of Gibson’s latest guitar models have not helped boost their credibility, either.
Although Gibson vintage guitars may sell for extraordinary sums—like $550,000 for a 1960 Les Paul Standard—the company’s P&L statement sees little benefit from these transactions. With annual revenues over $1 Billion, it’s a matter of whether Juszkiewicz will be able to convince investors that Gibson isn’t just a company of the previous century—the clock is ticking.
Dallin Earl is an Entertainment Highlight Contributor for the Harvard Journal of Sports and Entertainment Law and a current first year student at Harvard Law School (Class of 2020).