RadioShack Laying Ground Work For Filing Bankruptcy

RadioShack’s falling store sales and profit is nothing new. In fact, stock prices have been falling since 2011 and in March of this year The Shack have been closing stores and and looking for ways to add cash to keep operating while they execute their turnaround plan. So far it has not happened and 2Q 2014 looks to be another disappointment.

Staples and RadioShack Closing Stores

RadioShack Time Running Out According To Analysts

RadioShack has reported $673.8 million in second quarter sales which is down from $861.4 million 2Q 2013. Comp store sales were down 20%. Net earnings where yet again a net loss at $119 million. That is more than 2x the net loss for the same period 2013 which was $51 million.

RadioShack CEO Joseph Magnacca said in a statement Thursday morning:

“As a result, we are actively exploring options for overhauling our balance sheet and are in advanced discussions with a number of parties.”

In RadioShack’s SEC Filing:

“If acceptable terms of a sale or partnership or out-of court restructuring cannot be accomplished, we may not have enough cash and working capital to fund our operations beyond the very near term, which raises substantial doubt about our ability to continue as a going concern. As a result, we may be required to seek to implement an in-court proceeding under Chapter 11 of the United States Bankruptcy Code.”

The SEC Filing went on to say:

“There can be no assurance that any of these efforts will be successful. Each of the foregoing alternatives may have materially adverse effects on our business and on the market price of our securities. In the event the restructuring alternatives described above are not achievable, we would likely be required to liquidate under Chapter 7 of the Bankruptcy Code.”

Chapter 7 would obviously be the death of the once mighty brick and mortar tech store chain. Currently RadioShack has rebounded from trading at less than $1 and has a 10% rebound.

[source: Forbes]