Expected bankruptcy is being kind to the retailer that everybody knows but few visit, and its bankruptcy is imminent.
The Wall Street Journal and others believe that the bankruptcy filing for the Fort Worth, Texas retailer is coming early in February as the company reaches out to potential lenders to keep it operating during the process. Most likely, the filing will come in the first week.
RadioShack’s brief turnaround petered-out as the retailer continued to bleed cash. Having posted losses for 11 consecutive quarters, this is hardly a surprise and it may prove difficult to find a private-equity interested in purchasing assets that would buy its assets out of bankruptcy.
Sprint now in the talks?
Late on Thursday, Bloomberg reported that in addition to talks with the unnamed private-equity firm, RadioShack was in talks with in active talks with Sprint to sell a number of its stores’ leases to the wireless carrier. Bloomberg cited a source with direct knowledge of the negotiations whom, not surprisingly, was not named in the article.
RadioShack presently has over 4,000 stores and is expected to emerge from bankruptcy after restructuring with somewhere between 2,000 and 3,000 stores.
Merianne Roth, a spokeswoman at RadioShack, didn’t immediately respond to telephone and e-mail messages seeking comment from Bloomberg. Scott Sloat, a Sprint spokesman, chose not to comment on any potential talks with RadioShack when contacted by the same news agency.
RadioShack opened its first shop in Boston 94 years ago and grew right alongside the growth of electronics in the life of the typical American consumer. From transistor radios to Bluetooth accessories and smartphones, RadioShack was always there. However, the Internet and online shopping effectively killed the retailer that had been on the cutting edge for decades.
RadioShack stock takes expected hammering
RadioShack closed Wednesday’s trading at $0.41. A disaster considering that in the last year the stock had been trading at $2.79. No matter how much that has certainly disappointed investors, today was even worse with the retailer closing at $0.26 for a loss of 35.63% on the day.
All in all, RadioShack just summed up a bad day for the retail sector as Target announced that it would shutter its stores in Canada, whil Best Buy dropped 15% after lowering sales forecasts following the holiday season.