fb-pixelRadioShack says it’s on brink of bankruptcy - The Boston Globe Skip to main content

RadioShack says it’s on brink of bankruptcy

RadioShack, the struggling electronics retailer that is quickly running out of cash, said Thursday it might have to file for bankruptcy protection, or even liquidate, if it cannot arrange a lifeline.

In a stark disclosure of its deteriorating financial situation, RadioShack said in a regulatory filing that, absent an external solution, it would be unable to finance its operations “beyond the very near term,” raising doubts about its future in business.

RadioShack said it was in talks with third parties and its financial stakeholders about a number of possible options, including a sale, a significant new investment, or a restructuring. The company said some form of recapitalization “may be our most likely course of action,” but that it could not guarantee such a deal.

Advertisement



Should the company fail to find a solution, RadioShack may be forced to file for Chapter 11 bankruptcy protection, it said. In a still more drastic step, RadioShack added, it could be forced to liquidate.

Once an important player in the technology world, RadioShack began to look increasingly obsolete as the digital revolution passed it by, and it has reported losses quarter after quarter. It has undertaken a restructuring effort for the last 18 months, though its ability to close stores has been limited by its agreement with its lenders.

RadioShack’s stock price, as low as 55 cents in the summer, rose 9.6 percent Thursday, to a $1.02 a share.

The disclosure Thursday came as RadioShack reported financial results for its second quarter, which ended Aug. 2. The company said its revenue fell 22 percent, to $673.8 million, from the period a year earlier, while its losses widened to $137.4 million from $52.2 million.

The company said it had $30.5 million of cash as of Aug. 2, compared with $179.8 million at the end of last year. The available borrowing in its credit facility stood at $152 million as of Aug. 2, while the company’s debt totaled $656.9 million.

Advertisement



For decades, RadioShack’s stores supplied mainstream consumers and gadget geeks alike with all manner of electronics, as well as the parts to fix them. But major shifts in technology and retailing — including fierce competition in the wireless business and the move toward online shopping — have eroded its sales.

The company’s response under Joseph C. Magnacca, who became the chief executive last year, has involved revamping some store locations while trying to close others.