Posted on 08/29/2023 10:08:17 AM PDT by Drew68
Fender’s CFO Matt Janopaul has revealed that in 2022 the electric guitar giant had to deal with almost $100 million worth of canceled orders.
Most players know by now that one of the few upsides of the pandemic was a boom in guitar sales. Indeed, after some years on the wane, guitar sales returned to their highest figures since the ’60s Beatlemania boom.
Of course, what goes up, must go down, and a decline has subsequently followed. Now we have some concrete figures from the world’s biggest guitar brand, Fender.
Speaking to business publication Pyments as part of its Tough Calls series, Janopaul discussed the extent of the downturn in orders and explained how Fender survived the knock.
“We had 16 million people pick up a guitar during the pandemic, 30 million worldwide. And the industry and Fender really benefited from that,” explains Janopaul.
“Then, of course, we get to 2022 and people decide to start taking vacations or doing other things with their disposable income. Guitars were no longer the priority – and the tough call I had to make was dealing with retail partner cancellations of orders in the magnitude approaching $100 million.”
Putting that into perspective, Janopaul says the figure equated to roughly “600,000 guitars and 200,000 amps”. As such, the firm opted to move quickly.
“We took action,” he tells Pymnts. “It was one of those things where you could not wait.”
Translating the business jargon [“postponed POs with our OEMs” anyone? – Ed] that action took the form of slowing down manufacturing – a challenging task, with supply lines that cross continents – and dealing with a significant stockpile of product.
“If [suppliers] had stuff that was about to hit the water, we said, ‘Please hold on to it’ and that we’ll eventually need it and will work through it,” says Janopaul.
“We stood up extra warehouses where the [existing] product could come into. Then we looked at every single piece of our operating expense infrastructure and said, ‘Where can we either cut costs or slow things down?’”
The firm reportedly laid off 300 California employees last August and the news appears to align with speculation online from players and dealers that Fender has been working through a significant oversupply.
What has that meant for us guitar buyers? Well, you might have spotted a few discounts on Fender’s direct sales platforms – not least its ongoing Labor Day sale. Likewise, Fender opted to not appear at NAMM in 2022 and 2023, citing the costs involved.
While we don’t necessarily expect Fender at NAMM next year, we’d speculate that another factor behind that decision might have been about keeping marketing budgets intact, ready to back new inventory down the line.
Regardless, it would seem the call was the right one. Indeed, Fender CEO Andy Mooney told us earlier this year that “2022 ended up being the second best year we've ever had.”
“Often what happens is that out of these tough calls, and borne of patience, comes opportunity,” says Janopaul.
“Fender is 77 years old. We’ve been through recessions, wars, now a pandemic, economic downturns, you name it and the company has continued to thrive. It’s always going back to the basics: saying what does the brand stand for? What do guitar players or musicians want and delivering on those things.”
For more on Fender and NAMM, the future of the iconic guitar firm and a digital amp development that “will blow people’s minds”, read our full 2023 interview with Fender CEO Andy Mooney.
If you think that’s bad some guitar companies are charging more for electric guitars made from special kinds of wood. They claim it improves the tone. Of an electric guitar. Lol. There’s one born every minute.
If you want an expensive hobby, start picking up pedal steels.
Good point. Even a Squier Bullet runs about $200 now.
Starter (or practice) amps retail in the $80 range, and figure wholesale is a fraction of that. I’ll bet they sell twenty 10 watt amps for every twin reverb.
Had a 70's era Jag, wish I still had that too, not to mention the 3/4 Gibson Melody maker.
Tell me you don't know anything about electric guitars without telling me you don't know anything about electric guitars.
Wood has a great deal with how an electric guitar sounds. Maple-topped guitars are brighter, as are guitars with maple necks.
Leo Fender used ash and alder because they were readily available and sounded good. Pine electrics are light but have a different sound. Solid maple electric guitars are extremely heavy.
Unfortunately, a lot of "old-growth" hardwoods are scarcer than they used to be and we're seeing in increase in alternative woods from Asia such as basswood. Brazilian rosewood and ebony from Madagascar used for fingerboards is now much harder to come by and can run afoul of CITES laws (what Obama pummeled Gibson over). We're even seeing in increase of fake wood like Richlite (super compressed cardboard + epoxy resin) enter the manufacturing process.
Type of wood used in electric guitar manufacturing contributes to tone, sustain, durability, and weight and matters a great deal.
The worst “Covid-Fad” was people getting animals out of shelters “So they wouldn’t be home alone” only to dump them when the restrictions were lifted.
Sure it does. However the tone control does a heck of a lot more. Or a programmable amp will make it sound any way you like.
I would agree. Played a new AmPro2 tele recently. Really nice!
Hella pile.
I bought and sold guitars starting in the 70’s, far fewer in recent years. I used to aspire to owning many.
I’ve sold off all my truly vintage ones, a ‘57 Strat, a ‘60 Strat, a ‘64 Strat and a ‘65 Jazz Bass. They just started to represent too much money to keep around, and most of them needed work (beyond what I can do) and I needed the money. They very notably allowed me to bring money down through time.
I don’t play enough any more to justify owning more than the three I still have. Actually 5, two are put-together pieces of junk.
They just need to wait until mid September when Brandon brings back the lockdowns.
Guitar prices coming down fast!
Yep! This is the best time ever to buy a quality "barely played" used guitar.
I wish I'd sold my 100 watt Marshall stack at the peak of the boom. It's just too big and too loud for my quiet suburban life these days.
I read this among recent press releases from Fender. Just laughable.
Apparently, there is a new series of Fender guitars called “Streetwoods” So these guitars are yer standard Strats and Teles except the bodies and necks are made from woods ‘harvested’ from American streets. In other words, the woods come from tree-service woods, LOL. And they start at $9K. Which is at least partially crazy because oak and walnut, fairly common “streetwoods” are not good guitar woods. Oak just completely sucks, Walnut is heavy as hell.
So there’s some reason I guess to believe a $9,000. Strat made from that narly old walnut tree cut down from in front of aunt Edna’s house is built better than a regular Mexican Strat (which have gotten really good) for $500 or an American Strat for $1200..... Because these come out of the “custom shop” and are “master built”.
https://guitar.com/news/gear-news/fender-launches-new-collection-sustainable-guitars/
Yeah, totally ridiculous, as well as the black "Frankenstrat" pictured upthread.
However, the days of the $500 Mexican Standard are well behind us. I've been eyeing a Jason Isbell signature Tele. Not that I'm a huge Isbell fan, I just really like the specs. It's Mexican-made and nearly $1700 retail.
I will say the Mexican-made Fenders are really great instruments, even at their newly inflated price points.
Dude, Man! I thought I had an extensive guitar collection, but yours drawfs mine. Did pickup a beautiful Gibson Dove acoustic a couple of months ago. Beautiful instrument, both cosmetically and tone quality. Play on!
Back when I played bass I listed after a Richenbacker.
L
Yes. Well an electric guitars sound is 95% pickups and only a tiny portion comes from the wood. People have made great sounding guitars from glass or plastic. Almost anything you can attach pick ups to will do. One guy has sound charts of pickups screwed to a tree. It sounds just like a guitar. YouTube has dozens of videos on this subject.
“However, the days of the $500 Mexican Standard are well behind us. “
I’m certainly out of the loop on current retail prices, I go more on Craigslist pricing and you would appear correct on $500 Mex Strats. Frankly, I can’t recall ever buying a brand new guitar in 50 years. True, you do not get to go to Guitar Center and pick from among 3-6 examples, but I’ve never bought a brand new guitar from a music store that I can recall!
I play bass now, and I lust after a Rickenbacker. Can’t justify the $2000, though.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.