RadioShack Corporation (RSH) reports disappointing earnings

Posted Jun 10, 2014

RadioShack Corporation (NYSE:RSH) has reported disappointing earnings. This is because the company is being blocked from closing stores. RadioShack disclosed in a regulatory filing that its lenders blocked plans to close 1,100 stores. RadioShack currently operates 4,250 retail stores in the U.S.

RadioShack said it would close 200 stores per year over the next three years. By rejecting RadioShack’s plan to close stores, the company lenders and vendors have forced the company to burn through cash, which could force it into seeking bankruptcy protection.

RadioShack’s cash and equivalents holdings totaled $61.8 million as of May 3 compared to $109.6 million on February 1st and $179.8 million at the start of the year.

However, RadioShack said that lenders have been supportive of its turnaround efforts in an earnings conference call regardless of what was written in the press. Will RadioShack go bankrupt with this current burn rate? Highly likely.

[Sources: Bloomberg/BI]