Guitar Centers Hurt By Costs, Poor Sales

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Poor sales and expenses related to a proposed merger hurt Guitar Center Inc., sending shares down in after-hours trading.


Guitar Centers reported second quarter net income of $9.6 million (32 cents per share), a 26 percent dip from $13 million (47 cents) from the same period a year earlier missing Wall Street’s expectations of 39 cents, according to Reuters Estimates.


Guitar centers also said that expenses associated with the $2.1 billion buyout by Bain Capital Partners LLC, which the company agreed to in June, trimmed 5 cents per share from the quarterly results.


Sales for the Westlake Village-based music equipment retailer increased 13 percent to $519 million, also missing Wall Street’s expectations of $524 million.


Chief Financial Officer Erick Mason said in a statement that a 9 percent total sales rise at the company’s Guitar Center stores was “slightly below plan due to a challenging retail environment.”


Shares in Guitar Centers closed down 33 cents to $57.57 and continued to drop another $1.51, or 2.6 percent, to $56.06 in after-hours trading Tuesday on the Nasdaq.

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