Radio Shack May Run Out Of Cash, Fail To Turn Itself Around

Back in June, we learned that part of Radio Shack’s turnaround plan is to start in-store repair counters for mobile devices as a bid for relevance and an attempt to offer at least one thing that no other retailer does. However, the credit-rating agency Moody’s doesn’t think that Radio Shack has enough cash to make it through 2015, let alone turn itself around by then.

The company has $62 million in cash on hand right now. That might seem like a lot, especially compared to the eight bucks in your wallet, but Moody’s also points out that the company had an $81 million operating loss in the second quarter of 2014.

Investors don’t have much hope, and the chain’s stock has reached such a low price that the New York Stock Exchange has threatened to kick it out of the exchange. The company has 6 months to turn its performance for investors around and get the stock price above $1, or it will be kicked off. Of course, the note from Moody’s didn’t help, and the stock is down to 68 cents as of this morning.

Moody’s doesn’t expect a sudden influx of customers to pour into the Shack anytime soon. The agency made its predictions based on the assumption that sales will keep falling, and the chain will need to use its cash reserves to keep going. How much have sales fallen? While the Shack has closed some stores, they dialed back their original plan to close even more. the key number is same-store sales. They were down 15% in May.

RadioShack May Not Have Time or Cash For a Turnaround, Moody’s Says [Wall Street Journal]
RadioShack is running out of cash: Moody’s [CNBC]

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  1. careycat says:

    Radio Shack has been such a venerable brand, like Sears, K-Mart, etc. Times are changing.

  2. ZLoth says:

    The Radio Shack of today is nothing like the Radio Shack of the 1980s. It’s time for this brand to become a relic of the past.