At least you get 1,500 more Sprint stores in the deal.
The fact of the matter is there will be 2,500 more SPACE AVAILABLE signs in dying malls across America.
The fact is that at least 20,000 more Americans will be losing their jobs.
And this isn’t the end. Guitar Center is about to go bankrupt.
JC Penney and Sears are on a Bataan Death March towards bankruptcy. The entire debt financed, consumption based, mallcentric delusion is being shattered. Get used to it. It has only just begun.
Make sure you pick up a remote control car during their liquidation sale.
RadioShack Corp. filed for Chapter 11 bankruptcy protection Thursday after reaching a deal to sell as many as 2,400 of its stores to hedge fund Standard General.
Who predicted this for the last three years? I’ll also be right about JC Penney and Sears. It’s just a matter of time. The retail scrap heap of history adds another retailer.
RadioShack Prepares Bankruptcy Filing
Struggling Electronics Chain, in Talks with Lenders, Could File as Soon as Next Month
By Matt Jarzemsky, Mike Spector and Drew FitzGerald
Updated Jan. 14, 2015 7:14 p.m. ET
RadioShack Corp. is preparing to file for bankruptcy protection as early as next month, people familiar with the matter said, following a sputtering turnaround effort that left the electronics chain short on cash.
A filing could come in the first week of February, one of the people said. The Fort Worth, Texas, company has reached out to potential lenders who could help fund its operations during the process, another person said.
Meanwhile, RadioShack is in talks with a private-equity firm that could buy its assets out of bankruptcy, the people said. They cautioned that the talks with the private-equity firm may not produce a deal and that the company may try instead for a more typical reduction of debt and restructuring of its operations in bankruptcy court.
Situations when companies are close to a bankruptcy filing can be fluid and even contentious, and plans can change at the last minute.
The retailer has made clear it is running dangerously low on cash after posting losses in each of the last 11 quarters, and its stock-market value has shriveled to less than $50 million. In December, it warned in a securities filing that it could be forced into bankruptcy court if it couldn’t raise new funds or get relief from lenders that have blocked its efforts to close hundreds of stores.
The company said in the filing that it had $62.6 million on hand as of Nov. 1—$43.3 million in cash and $19.3 million in borrowing availability—a thin cushion for a sprawling chain with about 4,300 company-operated stores in North America.
The 94-year-old chain that started in the 1920s with a store in Boston traced the rise of electronics in the life of Americans—from transistor radios and typewriters to Bluetooth headphones and smartphones. It grew into a nationwide icon but began spiraling toward irrelevance as electronics moved to the Web and technology moved on.
Delia’s and Deb Shops filed for bankruptcy in December. That’s 438 more vacant storefronts across America. Now Wet Seal will close at least 338 more stores, and likely all 500 when they file for bankruptcy in the next couple weeks. Then the biggie. RadioShack will end up closing 5,000 locations when they file for bankruptcy in the very near future. Once the financial results are reported in February for all the major retailers you will see announcements from Sears, JC Penney, Macys and many others closing hundreds or thousands of more stores. Sure sounds like a consumer driven economic recovery.
Teen retailer is closing most of its stores and laying off staff
NEW YORK (MarketWatch)—Teen retailer Wet Seal Inc. said Wednesday it is shutting two-thirds of its stores as it races to shore up liquidity and keep its operations afloat. But it may be too late to avoid the fate of former rivals Delia’s and Deb Shops, which filed for bankruptcy protection in December.
Already, a lender on some of the company’s senior convertible notes has issued a default notice with a deadline of Jan. 12. Unless Wet Seal meets its obligations or strikes a new agreement, the company is facing bankruptcy, said former bankruptcy attorney David Tawil of hedge fund Maglan Capital.
Wet Seal
“I don’t think that there is a good chance (of it surviving) unless there is a trick up someone’s sleeve that we haven’t seen yet,” Tawil told MarketWatch. “It has been a long time coming.”
Wet Seal didn’t respond to a request seeking comment.
Wet Seal said the store closings came after it failed to get concessions from its landlords. The retailer, once a destination for teen and college girls, has lost sales to other fast-fashion players such as Forever 21 and H&M.
The teen sector has generally underperformed the broader retail segment, and other companies including Aéropostale Inc.ARO, +2.23% and Pacific Sunwear PSUN, +4.55% also are expected to shut stores this year. The sector is battling the trend in which teens are shifting spending to electronics and other items over fashion.
Wet Seal CEO Ed Thomas, who returned in September after heading the company from 2007 to 2011, has admitted the company has gotten “off-track,” skewing toward a younger customer with too much basic merchandise.
Thomas has promised to return the chain to “a fast-fashion model with emphasis on fashion product” that provides “constant newness.” The company will focus on fashion assortments over basics and define its target customer as 18-24-year-old women.
But that may be too late. Wet Seal has lost money in eight of the past 10 quarters, and is expected to lose money the next two quarters, according to Retail Metrics. Its comparable sales dropped 11 of the past 13 quarters. Holiday-quarter sales are expected to slump another 9.7%, after a 14.% drop in the third quarter, Retail Metrics data showed. Cash and cash equivalents tumbled 37% to $19.1 million as of Nov. 1 from a year earlier.
Some employees on Wednesday posted signs in store windows, with the hashtag #forgetwetseal, complaining that the company didn’t give them any prior notice of the closures and they weren’t paid for unused vacation and sick time.
“It’s possible but very unlikely” it will survive, said Retail Metrics President Ken Perkins.
The only question now is whether RadioShack declares bankruptcy before Christmas or shortly thereafter. The fat lady is singing and there will be thousands of Space Available signs coming to malls near you.
RadioShack again denies defaulting on loan
By Chelsey Dulaney
Published: Dec 8, 2014 7:29 a.m. ET
RadioShack Corp. on Monday again denied that it has defaulted on a loan from its term lenders, less than a week after the struggling electronics chain initially disputed the allegations as “wrong and self-serving.”
The lenders–Salus Capital Partners and Cerberus Capital Management–a year ago provided a $250 million lifeline that helped keep RadioShack in business. They now say RadioShack RSH, +0.00% defaulted on the loan when it secured a separate credit line in October.
The default claim follows the lenders’ efforts to block RadioShack’s plan to close up to a quarter of its roughly 4,300 U.S. outlets and free up about $200 million in costs.
RadioShack on Monday said it doesn’t believe the lenders’ demand for immediate payment has any merit. The company also said that the amount of revolving loan commitments remains $535 million.
The spat is the last thing RadioShack needs as it tries to sell enough headphones, speakers and other electronic gizmos to make it through to January, when a further recapitalization is due to happen. It comes in the middle of the critical holiday selling period, when retailers generate up to a fifth of their annual revenue.
It’s too bad 98% of the people in this country are math challenged. The storyline of retail recovery is false. It will continue to be false based on pure mathematics and demographics. The fact is that REAL retail sales, adjusted for population growth, are at the same level as 1999 and still 5.3% below the debt induced peak in June 2005. That doesn’t sound catastrophic until you take into account that delusional retail CEO’s across the land added 3 BILLION square feet of new retail space since 1999, bringing total retail square footage up to 15 BILLION. That is approximately 50 square feet of retail space per person in the U.S.
Retailers judge themselves upon sales per square foot. If you add 25% more square feet and achieve the same level of sales, guess what happens to profits? When you see the MSM crowing about Home Depot’s tremendous sales and profits, they fail to mention that they are still lower than they were in 2007. Retail sales have peaked for this cycle and are headed down. With 10,000 Boomers per day turning 65 years old with no savings, the future for retail gets bleaker by the day. There have been quite a few announcements of store closings by major well known retailers in the last few months, but we are only in the 2nd inning of this ball game. It won’t be over until the 15 Billion square feet is whittled down to 10 Billion square feet. If you were thinking of buying JC Penney, Sears or RadioShack stock, you might want to think twice about it.
The best investment today would be in the company that makes SPACE AVAILABLE signs.
Shocking news. I wish someone had predicted this. Wall Street will say it’s BULLISH!!!! They need some more muppets to fleece.
1,100 more empty stores in malls across America. I’m sure landlords will have no problem filling those spaces. That hot new retailer SPACE AVAILABLE will take over all of the locations.
I’m sure this brilliant retail strategy will surely revitalize RadioShack. I wonder when JC Penney, Sears, Kohls, and dozens of other retailers will be announcing the same brilliant strategy?
Here is a preview of RadioShack’s new ad campaign.
RadioShack to close 20% of its stores; earnings miss
Same-store sales slide 19%
By Ben Fox Rubin
RadioShack Corp. said Tuesday that it expects to close up to 1,100 U.S. stores, or about 20% of its footprint, while reporting its fourth-quarter loss widened significantly.
Shares (NYSE:RSH) dropped about 28% premarket as the struggling electronics retailer’s results were considerably worse than market expectations. The company said it will continue to have about U.S. 4,000 locations.
Chief Executive Joseph C. Magnacca said the poor results were driven by lower store traffic, intense discounting particularly in consumer electronics and a “very soft” mobility marketplace, as well as a few operational issues. Despite all those problems, he said the retailer is making progress on its turnaround.
Bloomberg
RadioShack has struggled to reverse a string of recent losses deepened by a sales strategy focused around smartphones, which failed to improve revenue over the last two years.
Magnacca, a former Walgreen Co. executive who was hired last February, outlined a strategy last year to refurbish stores by overhauling layouts and removing items from the shelves, part of a broader effort to improve perception among younger customers while keeping traditional “do-it-yourself” patrons satisfied.
Sales at stores open at least a year dropped 19%, driven by traffic declines and soft performance in the mobility business, while gross margin narrowed to 29.8% from 35.8%.
RadioShack reported a loss of $191.4 million, or $1.90 a share, compared with a year-earlier loss of $63.3 million, or 63 cents a share. Excluding some write-downs and other items, the per-share loss was $1.29.
Revenue sank 20% to $935.4 million.
Analysts polled by Thomson Reuters had most recently forecast a per-share loss of 14 cents on revenue of $1.12 billion.
The company ended the quarter with total liquidity of $554.3 million, including $179.8 million in cash and cash equivalents and $374.5 million available under a 2018 credit agreement.
Here I go again. I wrote two previous articles about the downward spiral of Radioshack in October and September of last year, and its ultimate meeting with bankruptcy court. Here is a link:
They didn’t disappoint with their 4th quarter results. They were absolutely horrific and confirm everything I’ve written before. Here is a link to their report.
They generated a massive $63.3 million loss during what is supposed to be their best quarter of the year, after making a profit of $11.9 million last year.
Their annual loss was $139.4 million, after making a profit of $72.2 million in the prior year.
Fourth quarter comparable store sales plunged by 7% in the 4th quarter.
Sales for the year declined by 3%, but their inventory grew by 22%. This is a DEADLY combination for a retailer.
Their accounts receivable surged by 18%, indicating that the little sales they are generating is on large doses of credit to their customers.
They had a negative cashflow of $137 million for the year.
They have $288 million of debt due within the next year. Their cash position should get them through one more year, but if their suppliers get worried the jig could be up.
Radioshack operates 7,000 locations and employs 34,000 people. Their only chance at survival is to close their 30% worst performing stores immediately. Retail CEOs rarely have the wisdom and reality based thinking to do what needs to be done. Time will tell, but this is just another dead retailer walking.
Wet Seal
