Many economists are expecting a recession in the U.S. sooner than later, but one CEO isn’t worried.
Any signs of economic trouble are “certainly not affecting business at the moment,” Fender CEO Andy Mooney told Yahoo Finance in an interview in New York City. “Any business category where there is an emotional connection, sport from my Nike experience, music from my Fender experiences, those businesses are not recession-proof, but the recession-resistant.”
Mooney added: “The American consumer is especially resilient. … They are increasingly discerning, I believe in terms of the product purchasing and ... they're very bankable for the long run.”
Bullish on guitars
“The guitar industry has been growing steadily for the last decade on average high single-digit, low double-digit growth,” said Mooney. “Our growth has actually been outpacing industry growth because we have been gaining share in almost every category over the last five years.”
Unlike competitor Gibson, which filed for Chapter 11 bankruptcy last year with as much as $500 million in debt, Fender made slightly more than $560 million in global revenue in 2018, according to the company.
Fender’s appeal to women
The legendary American guitar maker, which counts heavyweights like Eric Clapton and Jimi Hendrix as its customers, has had a solid run since it was founded in 1946. The privately-held company made history in the 1950s by introducing the Telecaster, which quickly became a hit. It followed up with the Stratocaster in 1954.
Mooney noted that over the years, women have become a big part of the Fender equation. According to the company, about 50% of new guitar buyers are women. And despite being big-ticket items, women were “predominantly buying it online,” Mooney added.
“The in-store environment can be pretty inhospitable for a first time player,” he explained. “And I think even more so for women because they don't have a lot of female sales associates to relate to.”
At the same time, the company is facing some pressure in the UK: The company’s European arm is facing allegations by the UK’s Competition and Markets Authority that involve alleged pressuring of companies to sell its instruments at high minimum prices. Mooney said that the company was working on it.
“We are approaching this with utmost seriousness and working in full collaboration with the CMA to resolve the issues,” he stated.
Aarthi is a writer for Yahoo Finance. Follow her on Twitter @aarthiswami.