Fender had $100 million worth of retail sales cancelled in 2022
Fender CFO Matt Janopaul has revealed that the company had to deal with nearly $100million’s worth of cancelled orders in 2022.
Guitar sales enjoyed a boom during the pandemic, reaching their highest level since the post-Beatles era, as people sought to take up something new to keep them entertained during lockdown. However, as things have returned to normal and inflation worldwide has squeezed people’s incomes, sales have begun to decline.
Speaking to business publication PYMNTS as part of its Tough Calls series, Janopaul discussed the extent of the downturn in orders and explained how Fender is surviving the fall in sales.
“We had 16 million people pick up a guitar during the pandemic, 30 million worldwide. And the industry and Fender really benefitted from that,” he said.
“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.”
Janopaul explained the lost income equated to roughly 600,000 guitars and 200,000 amps, which required Fender to take swift, decisive action. “It was one of those things where you could not wait.” The company opted to slow down manufacturing while they handled 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?’”
There had previously been speculation online among players and dealers that Fender was dealing with a significant oversupply. The manufacturer also decided not to appear at NAMM in both 2022 and 2023 due to the costs involved.
Janopaul appears to remain optimistic, however. “Often what happens is that out of these tough calls, and borne of patience, comes opportunity.
“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.”
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