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.