Guitar Center, Inc: Financial Ratio Analysis Report

Guitar Center is a retail chain that specializes in guitars, amplifiers, percussion instruments, keyboards, audio and recording equipment. There are currently 138 Guitar Center stores while the company also includes 19 family music stores that specialize in orchestra and band instruments. The company also owns Musician’s Friend, a retail operation filling catalog and website orders. 

Guitar Center Inc. was incorporated in 1964 and re-incorporated in 1996. As of the year-end average, the organization employees about 6,500 people in several major markets and secondary markets. Guitar Center Inc. recently completed the acquisition of Music & Arts Center, a transaction with the purchase price of $90,000,000, which ranks as the highest valued acquisition the company has completed. In 2004, the company saw a gross profit of $425,274,000 and has seen a considerable increase with each passing year. 

On April 28, 2005 Guitar Center Inc. announced their 2005 first quarter results with a comment from the Chief Financial Officer of Guitar Center, Bruce Ross, "We are pleased with our overall performance during the first quarter of 2005. While we posted an increase in consolidated net sales and Guitar Center comparable store sales in line with our expectations, we were able to capitalize on our efficient cost structure to deliver a 35% expansion in net income. It is important to note that recent sales patterns have been uneven, making it more difficult to forecast business trends, and our direct response division is also facing a higher level of online competition. Due to these current trends we plan to increase our advertising and promotional activities in the remainder of the year to drive store and online traffic. We continue to see strength within our industry as a whole, and we remain confident in our ability to maintain consolidated operating leverage and long-term profitability." (Business Wire, 2005)