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Could Decline in Luxury Sales Hurt Music Products Companies like Steinway Musical Instruments, Inc. (LVB) and Music Products Retailers like Guitar Center, Inc. (GTRC)

October 31, 2007

Analysis of:LUXURY CONSUMERS' SPENDING PLUNGES TO ITS LOWEST LEVEL IN MORE THAN TWO YEARS | www.retail-merchandiser.com

With the decline of luxury goods sales Steinway Musical Instruments and Guitar Center could be affected. Steinway's Piano Division is the largest segment of their business. The majority of that business is Steinway product (not Boston or Essex) and is focused toward the luxury market. Guitar Center generated $3.7Million last holiday season when it sold out in short order the reproduction of Fender's Eric Clapton Blackie guitar. If the affluent spenders begin to curtail spending of luxury items, it seems logical that Steinway's sales would follow the trend. It also seems reasonable to think that whatever Guitar Center has planned for this season's luxury item may face a reluctant audience.

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