Troubled electronics retailer RadioShack Corporation (NYSE:RSH) filed a 10-Q with the SEC on Thursday confirming that if it doesn’t find a buyer or restructure its debt, a Chapter 11 or even Chapter 7 filing would be the next step.
RadioShack’s shares have plunged 23% since the beginning of the week, and was in the red in pre-market trading after it unveiled its earnings report and 10-Q. Shares have since rebounded and are trading currently with a 7% gain.
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Yet another quarterly loss for RadioShack
The struggling electronics dealer unveiled earnings Thursday, and reported its tenth straight quarterly loss. The company reported $673.8 million in second quarter sales, down from $861.4 million this time last year. Its comparable store sales dropped 20%, while net earnings showed a net loss of $119.4 million, more than double the $51.1 million loss reported in the second quarter last year. The per-share loss translates to $1.35.
Exhorting the need for additional capital, RadioShack Corporation (NYSE:RSH)’s chief executive officer Joseph Magnacca said in a statement Thursday: “For the past 18 months we have been working hard on our turnaround plan. While we are advancing on many fronts, we may need additional capital in order to complete our work”. He continued to say: “As a result, we are actively exploring options for overhauling our balance sheet and are in advanced discussions with a number of parties”.
Rescue package for the retailer
Earlier, citing knowledgeable sources, Bloomberg reported that UBS AG is working with Standard General LP on loans for RadioShack Corporation (NYSE:RSH), bringing another potential ally to the electronics retailer as it tries to avert bankruptcy. The amount raised would be used to refinance debt outstanding under a $535 million asset-backed revolving credit line from General Electric Co. unit of GE Capital.
The retailer’s sales have been in free-fall since 2010, as it has done little to transform itself into a destination for mobile phone buyers, losing out to rivals such as Best Buy Co., Inc. (NYSE:BBY), Amazon.com, Inc. (NASDAQ:AMZN) and Wal-Mart Stores, Inc. (NYSE:WMT). The beleaguered retailer raised doubts about its ability to continue as a going concern and said it may have to liquidate as a last resort.
On Tuesday, RadioShack Corporation (NYSE:RSH) shares dropped over 22% following an analyst at Wedbush stating that a bankruptcy reorganization was imminent. Painting a gloomy picture, Wedbush analyst Michael Pachter said the shares of the retailer have no value.