Radio Shack Store Closing Update: Retailer Scales Back Original 1,100 Locations After Talks Fall Through
May 10, 2014 09:31 PM EDT
Some of Radio Shack's 1,100 stores, originally slated for closure, will remain open.
According to USA Today, the retailer and various bankers could not strike a deal to shutter the company's initial number of locations after talks failed.
An analyst at Wedbush Securities told Bloomberg Businessweek low revenue numbers, and Radio Shack's long list of store closures also played a factor.
According to a U.S. Exchange and Securities Commission filing USA Today obtained, the company will instead work with bankers to close less stores to correct Radio Shack's current financial state.
"Apparently the creditors believe that their chances of being repaid are greater if there are a greater number of stores open," analyst Steven Pachter said. "RadioShack management believes the company will be healthier with fewer stores. So they don't see things the same way. There's no real reason to go to a RadioShack store."
Radio Shack said the company does not agree with bankers' terms of the deal.
"The terms on which the lenders are currently willing to provide this consent are not acceptable to the company," Radio Shack said in the filing, USA Today reported.
Pachter also stated that Radio Shack could file for bankruptcy and handle the store closure on its own.
"The alternative RadioShack is going to be faced with is to declare bankruptcy, which will put the creditors at bay and allow (RadioShack) to close as many stores as they want," Pachter said.
Radio Shack must sign off with bankers prior to closing stores that equal one fifth of the company's United States and international locations.
Radio Shack unveiled plans to close 1,100 properties March 4 - while the company announced $191.4 million in fourth fiscal quarter losses.
New store sales also fell 19 percent.