Tags: radioshack | bankruptcy | chapter 11 | cash

RadioShack Bankruptcy: Struggling Company May Be Forced to File Ch. 11

Image: RadioShack Bankruptcy: Struggling Company May Be Forced to File Ch. 11
(Shannon Stapleton/Reuters/Landov)

By    |   Friday, 12 Sep 2014 07:54 AM

RadioShack may be headed for bankruptcy, the company warned Thursday, saying it could be forced to file Chapter 11 if it can't find a quick solution to its cash or debt problems.

The struggling retailer said in a regulatory filing that it is in talks with its lenders, bondholders, shareholders, and landlords to fix its balance sheet, but if it can't, it will try to file a prepackaged bankruptcy.

RadioShack, which is based in Fort Worth, Texas, has been working on turning around its business for the past 18 months, according to The Associated Press. The company's efforts have included cutting costs, renovating and closing stores, and shuffling management. It reported another quarterly loss on Thursday on lower revenue.

Urgent: Do You Approve Or Disapprove of President Obama's Job Performance? Vote Now in Urgent Poll

CEO Joseph Magnacca said efforts to fix the company's problems could include debt restructuring, closing more stores, and other cost-cutting measures. He said the company is reviewing several alternatives, some that would need consent from its lenders.

RadioShack is quickly running out of cash and warned Thursday that it doesn't have enough left to fund its operations beyond the "very near term." The company reported $30.5 million in cash and cash equivalents on hand as of Aug. 2. That's down from $179.8 million at the end of last year.

The company has struggled to find its place in the evolving retail and technology landscape. It's sought to remake itself, focusing on wireless devices and accessories, but growth in that business is slowing as more people have smartphones and see fewer reasons to upgrade. The company says it is working on becoming less dependent on that business.

It is trying to update its image and remain competitive against online and discount retailers. It is also working to add new products, including private-brand, and exclusive items.

Noting the company's dwindling cash, Standard & Poor's Ratings Services downgraded its corporate credit rating on RadioShack further into non-investment grade, or "junk," territory Thursday.

"We believe the company will default or restructure in some form that is tantamount to a default within the next six months," S&P said in cutting its RadioShack rating to "CCC-" from "CCC."

For its second quarter, RadioShack reported on Thursday that it lost $137.4 million, or $1.35 per share, for the period ended Aug. 2. That compares with a loss of $52.2 million, or 51 cents per share, a year ago.

Stripping out certain items, loss from continuing operations was $1 per share.

Revenue dropped 22 percent to $673.8 million from $861.4 million.

Analysts surveyed by FactSet expected a loss of 66 cents per share on revenue of $735.9 million.

Magnacca said the quarter's performance was mostly hurt by the postpaid mobile phone business, as customers were relatively unenthused about the current phone selections and were waiting for announcements on new devices such as the next generation of iPhones. There were also intense promotional efforts by wireless carriers, he added.

Sales at stores open at least a year declined 20 percent on softer traffic and the weak performance of the mobile phone business. That figure is a key indicator of a retailer's health because it excludes results from stores recently opened or closed.

RadioShack's shares rose 9 cents to close Thursday at $1.02.

Urgent: Assess Your Heart Attack Risk in Minutes. Click Here.

© 2017 Newsmax. All rights reserved.

 
1Like our page
2Share
TheWire
RadioShack may be headed for bankruptcy, the company warned Thursday, saying it could be forced to file Chapter 11 if it can't find a quick solution to its cash or debt problems.
radioshack, bankruptcy, chapter 11, cash
558
2014-54-12
Friday, 12 Sep 2014 07:54 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved