RadioShack is bleeding cash, and could be forced to declare bankruptcy in the coming weeks.
The electronics retailer has implemented a turnaround plan that includes closing stores and remodeling existing locations with updated technology.
The brand’s executives wanted to close 1,100 underperforming stores; however, lenders restricted that number to just 200.
RadioShack’s only possible hope is to close many more of its 4,000 locations, writes Joshua Brustein at Bloomberg Businessweek.
“RadioShack reported a net loss of $US137 for the last quarter, two and a half times the loss from a year earlier,” Brustein writes. “The company has only $US30 million in cash as well as $US152 million in available credit.”
The company has been failing amid the rise of more convenient online retailers like Amazon.
RadioShack CEO Joseph Magnacca also stressed the importance of closing underperforming stores, which are expensive to maintain and operate.
“It’s clear that the pace of our turnaround is not fast enough,” Magnacca told investors.
RadioShack’s new efforts to redesign stores are too little, too late, Lasser writes in a note to clients.
“Even if these stores (and the other remodeled locations) have seen better results, we don’t think it will be enough to impact the entire chain,” Lasser said. “Also, we are sceptical that the refreshed locations will provide a halo benefit to those stores that haven’t been touched.”
While the brand could improve the experience at a few stores, that doesn’t mean that the overall business will improve, Lasser writes.
He also criticises the company’s strategy of adding new projects “to furnish a reputation of having the latest and greatest tech items.”
“We think this has been akin to throwing things against the wall to see what sticks,” Lasser said.
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