Shares in the once great retailer are plunging today following an announcement from the company that it would not be shuttering the 1,100 stores it announced earlier this year over disputes with creditors.
Lenders block closures
Yesterday, the corporation filed an 8-K with the SEC where Chief Financial Officer John Feray wrote:
Maverick USA was down 3.3% for the second quarter, while Maverick Levered was down 2.1%. Maverick Long Enhanced was up 8%. Year to date, Maverick USA is up 31.8%, while Maverick Levered has gained 49.3%. Maverick Long Enhanced has returned 9.9% for the first six months of the year. Maverick Capital is a long/ short Read More
“RadioShack Corporation (NYSE:RSH) (the “Company”) previously announced that it was seeking consent from its lenders under the 2018 Credit Agreement and 2018 Term Loan to pursue a program to close up to 1,100 stores. The terms on which the lenders are currently willing to provide this consent are not acceptable to the Company. While the Company may continue to have discussions with its lenders regarding the proposed store closure program, the Company is continuing with a plan to close fewer stores and pursuing other cost reduction measures permitted under the existing terms of the 2018 Credit Agreement and 2018 Term Loan.”
Chief Executive Joe Magnacca’s overhaul of the retailer and the current impasse with creditors it’s experiencing is not being well received by Wall Street today. The stock is presently trading at $1.34 down $0.14 per share or 9.42%. Through yesterday, the stock has dropped 43% since the beginning of 2014.
With underperforming stores across the nation, RadioShack Corporation (NYSE:RSH) had hoped that buy closing nearly a quarter of its stores it could stop bleeding cash. The retailer just reported its eight consecutive quarterly deficit with net losses widening to 119.4 million in the last reported quarter for the near century-old retailer. Sales at stores open at least one year fell just shy of 20% in the same period.
“While the company may continue to have discussions with its lenders regarding the proposed store closure program, the company is continuing with a plan to close fewer stores and pursuing other cost reduction measures,” the company said yesterday in the filing.
Can they turn it around?
While few believe that RadioShack Corporation (NYSE:RSH) will be able to right the ship in a day and age when people simply shop for everything at Wal-Mart Stores, Inc. (NYSE:WMT) or online with Amazon.com, Inc. (NASDAQ:AMZN), CEO Magnacca has hired a number of new executives to try to stem the losses that it puts up each quarter. Among these new hires is Dollar General Corp. (NYSE:DG) executive John Feray who was hired as the company’s chief financial officer.
The company will announce first quarter earnings (losses) next week.