Radioshack says it's seeking ways to boost cash
RadioShack Corp., the struggling electronics retailer, said it's working with creditors and other parties to get more capital after posting another quarter of plunging same-store sales and mounting losses.
The company is in advanced discussions to explore a number of options to revamp its balance sheet, including debt restructuring, a plan to consolidate stores and other measures, according to a statement today. The announcement follows a report from Bloomberg News that RadioShack is talking to Standard General LP and UBS AG about borrowing money. The company has liquidity of $182.5 million, including $30.5 million in cash, according to today's statement.
RadioShack posted a second-quarter net loss of $137.4 million, or $1.35 a share, compared with a deficit of $52.2 million, or 51 cents, a year ago.
Chief Executive Officer Joe Magnacca has been working to remodel stores and add new merchandise as the company tries to compete with Amazon.com Inc. and Wal-Mart Stores Inc. Still, comparable-store sales, considered a key gauge of performance, fell 20 percent last quarter. The company has reported only one quarter of positive same-store sales in the past three years.
"There's a gut check in retailing -- if the company doesn't exist, would you invent it today? And RadioShack would probably not be one that you would start today," Oliver Wintermantel, an analyst at International Strategy & Investment Group in New York, said in an interview before the results were released. "They don't stand for anything."
Even so, the financing discussions helped boost the stock today, sending shares up as much as 40 percent to $1.30 in early trading. They had lost almost two-thirds of their value this year through yesterday.
The New York Stock Exchange notified the company in July that it was out of compliance with trading requirements after its stock traded below $1 for 30 straight days.
To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochnerbloomberg.net To contact the editors responsible for this story: Nick Turner at nturner7bloomberg.net James Callan