Gibson Set To Cut Philips Audio Rebates, No New Products In 2018
Australian retailers stocking Philips audio products could be in for a tough time as global distributor Gibson Brands struggles to survive.
In Australia staff numbers have been cut back following the resignation of Tracey Duff the former leader of the ‘Innovation Team’ at Gibson brands.
Sources have told ChannelNews that there will be “No new” Philips headphone products launched this year and that all marketing rebates for retailers and marketing budgests have been cut.
We have also been told that staff numbers at the local operation are down to less than four.
Some retailers in Australia have already started to cut back their Philips range of headphones.
At Big W the Philips headphone range has been cut significantly and in some stores, prior Philips instore branding has been removed.
At the same time Philips Audio has come under threat from a surge in demand for Sony audio products.
Gibson Brands took over the global distribution and manufacturing of Philips audio products in 2014, they have struggle ever since to grow the brand.
Now the Company is deeper into debt — and closer towards bankruptcy as they struggle to refinace a $500 debt burdon.
The Company only turns over $1B a year.
Earlier this month, the Company started trimming jobs, plans are in place to cut between 12-15% of its current workforce.
The company employs a considerable workforce of subsidiary brands, all of which operate under the Gibson Brands umbrella.
Epiphone is probably the best-known wholly-owned Gibson subsidiary, though other divisions include KRK Systems, TEAC, Cerwin-Vega, Stanton, Onkyo, Dobro, Kramer, Steinberger, Tobias, Echoplex, Electar, Flatiron, Slingerland, Valley Arts, Maestro, Oberheim, Baldwin, Sunshine Piano, Take Anywhere Technology, J&C Fischer, Chickering, Hamilton, and Wurlitzer.
Sources have told ChannelNews that all of those divisions are potentially subject to major job cuts during the fiscal second quarter (which starts in April).
“The pressure on [Gibson CEO] Henry [Juszkiewicz] is extreme right now,” one source relayed. “He’s not getting a loan that size ($500M0 with the operational costs he’s looking at.”
Last month, Gibson’s giant debt pile came into shocking focus.
In February, the company paid down $16.6 million on $375 million in senior secured notes that come due this summer.
Specifically, Gibson must pay that entire amount by late July or face default.
We can also reveal that a Chinese Investment Consortium Is currently eyeing a Gibson acquisition.
That would subsequently trigger a debt of $145 million in bank loans by early August. In total, Gibson is staring at roughly $520 million in debt payments — with fewer than four months to pay them.
“This year is critical and they are running out of time — rapidly,” Kevin Cassidy, a senior credit officer at Moody’s Investors Service, recently told the Nashville Post. “And if this ends in bankruptcy, [Henry Juszkiewicz] will give up the entire company.”
Moody’s has downgraded the company based on weak financials.