Guitar Center Prospects

* While we are grateful that the Stock Exchange column included Guitar Center [“Guitar Center Growth Could Hit a Sour Note,” Feb. 13], we would like to clarify some of the opinions used to determine the “don’t buy” rating placed on the company’s stock.

Unlike the analysts and investors tracking our performance, the column gave us poor marks. In fact, our growth and growth prospects are quite strong.

Michael Hiltzik placed a cap on our top-line growth in line with the 7% expected growth in consumer purchases of musical instruments. For the last four years, Guitar Center has had top-line sales growth of more than 25% versus the 7% growth in consumer purchases.

Additionally, the company has publicly projected top-line growth of 21% to 22% and EPS in the range of $1.20 to $1.26 for 2001. To cap our growth at 7% does not take into account the potential for increased market share, our entry into new markets or the purchasing habits of our customers.

In 2002, we plan to enter the $15-billion international music retail market. Additionally, our catalog and online divisions saw growth of 60% in fiscal 2000. To meet the growing demand, we have upgraded our technology infrastructure and expanded our distribution center. Moreover, we are breaking into the $13-billion domestic sound contracting business.

All retailers face the possibility of slowing sales in a softening economy. However, Guitar Center targets the professional musician and aspiring professional musician, people for whom purchasing musical equipment and accessories is not deemed discretionary spending.

Guitar Center has historically performed well despite the slow sales hitting other retailers in a softening economy. These musicians constitute more than 60% of Guitar Center’s customer base and account for more than 74% of total sales.

LARRY THOMAS,

Chairman and Co-CEO

MARTY ALBERTSON,

President and co-CEO

Guitar Center

Agoura Hills