Join The Discussion

 

Fort Worth's TPG takes controlling interest in Hollywood, sports powerhouse

A Fort Worth firm has gone Hollywood.

read more >

Downtown Fort Worth TIF reaches parking agreement with four garages

The TIF board will meet Oct. 29 to consider the agreements.

read more >

Oil price drop goes unnoticed in Texas' Eagle Ford shale

CUERO, Texas — From her vantage point of the U.S. shale oil boom, Jill Potts doesn't see anything to worry about.

read more >

Renovated Daniel-Meyer to put TCU basketball in the spotlight

You might say the Texas Christian University men’s basketball team was the sacrificial lamb in the university’s football-motivated move from the Mountain West Conference to the Big 12 Conference. The rising

read more >

E-Mist finds focus: Ebola gives infection control start-up its moment in spotlight

In the space of 72 hours, George Robertson found his company’s products on the cover of The New York Times and himself on CNN and WFAA, along with innumerable mentions in various media around the world.

read more >

RadioShack's comeback effort 'highly in doubt,' UBS says

Lauren Coleman-Lochner
(c) 2014, Bloomberg News.


NEW YORK — RadioShack's turnaround attempt is "highly in doubt" and new remodeled stores are unlikely to change the electronics chain's tarnished reputation, according to a report from UBS.

The company's effort to revamp its shops and product lineup "has been akin to throwing things against the wall to see what sticks," Michael Lasser, a UBS analyst in New York, said in the report on Monday.

Since taking over last year, Chief Executive Officer Joe Magnacca has struggled to stem losses and sales declines at the Fort Worth-based retailer. Creditors blocked a plan to close 1,100 underperforming stores earlier this year, and the company is now in danger of being delisted from the New York Stock Exchange.

RadioShack fell 3.5 percent to 62 cents as of 1 p.m. Tuesday in New York. The shares have lost more than three-quarters of their value this year. Lasser, who recommends selling the stock, expects it to drop to 50 cents over the next 12 months.

The company also faces a credit crunch, he said. At the end of last quarter, RadioShack had almost $62 million in cash and about $362 million available under a credit line that comes due in 2018, compared with total debt of $614.5 million, he said.

"The company is running in a perilous position with dwindling financial flexibility," Lasser said.

Andrea McCauley, a RadioShack spokeswoman, declined to comment.

Magnacca is working on what he calls "five pillars" to rejuvenate the retailer, including revamping products and stores and boosting efficiency. On the product side, the company has added merchandise such as Beats headphones and announced a partnership with PCH International to help startups design goods for the chain.

The company is promoting new interactive features at its remodeled stores, including a speaker wall and headphone demonstrations where shoppers can test items. Even if those stores perform better, "we don't think it will be enough to impact the entire chain," Lasser said. "We are skeptical that the refreshed locations will provide a halo benefit to those stores that haven't been touched."

RadioShack is in danger of running out of cash in 2015, according to Moody's Investors Service.

"We haven't seen any evidence of any positive impact from the turnaround plan yet," Mickey Chadha, a Moody's analyst in New York, said in an interview.

While Magnacca has cut cash needs by pruning inventory, the company is still in a tough spot because more than half of its sales come from mobile phones, Chadha said.

"That is a very, very competitive space, and the margins are very thin, and you have no pricing power," he said.

 

< back

Email   email
hide
Ebola
How worried are you about Ebola spreading?