Will Financing Be Enough for RadioShack's Record Breaking Turn Around? (RSH)
Although RadioShack has $461 million cash, this figure has been on a decline for several quarters with the company seeing $139 million in earnings losses for 2012. Adding to a weak balance sheet is the company’s rising inventories with falling sales. This raises the question of whether products can be moved on a timely basis, and is especially dangerous in the quickly moving electronics sector when value can be lost so quickly.
As the Wall Street Journal reported, CEO Joseph Magnacca announced that RadioShack has enough liquidity to pay down its debt in the near future and is not in a hurry to find new financing.
RadioShack, who is looking to rebrand itself, opened a concept store in New York at the end of June. The new store features headline brands like Apple (NASDAQ: AAPL) and Samsung (OTC: SSNLF), and hosts high tech shopping tools to help consumers compare products. RadioShack expects to open more or these stores in upcoming months.
Through the past several years, investment bank Peter J. Solomon has worked with a long list of retailers, including many distressed clients. Some of these include Office Depot (NYSE: ODP), Walgreens (NYSE: WAG), and Zale Corporation (NYSE: ZLC). Many of these have seen a turnaround since advising, a feat that would launch RadioShack into history books.
Shares of RadioShack opened up almost five percent Tuesday to $3.06, after falling from nearly $80 at the company’s peak.
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