RadioShack, running out of options, says it may file for bankruptcy
Facing falling sales and accelerating losses, electronics retailer RadioShack Corp. warned it may file for bankruptcy.
In a filing with the Securities and Exchange Commission, the Fort Worth company said Thursday it may need to file for Chapter 11 if other efforts such as a recapitalization or a sale fail.
The regulatory filing came as RadioShack announced bruising second-quarter financial results. The company said it lost $137.4 million, or $1.35 a share, compared to a loss of $52.2 million, or 51 cents, a year earlier. Revenue plunged 22% to $673.8 million.
Sales at stores open at least a year, a key measure of retail health, fell 20%.
Chief Executive Joseph C. Magnacca said poor mobile phone sales hurt results for the quarter as consumers waited for highly anticipated product launches this fall, such as the new iPhones.
Magnacca, in a statement, said the company may need additional capital to complete a turnaround effort that has included store closures and converting others into “concept stores” aimed at letting customers test out gadgets and interact with sales staff.
Magnacca said the company may turn to debt restructuring, a store consolidation program or other options to bolster the turnaround plan launched more than a year ago.
Other alternatives include a sale, a “partnership through a recapitalization and investment agreement” or an out-of-court restructuring, RadioShack said in the filing.
But if those efforts fail, RadioShack “may not have enough cash and working capital to fund our operations beyond the very near term,” and be forced to file for bankruptcy, the filing says.
RadioShack shares rose 15 cents, or 16%, to $1.08 in late morning trading.
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