RadioShack To Raise Funds In Hopes Of Wooing Vendors
By Anna Rose Welch, Editorial & Community Director, Advancing RNA
RadioShack at the mercy of vendors to revamp business
The electronics consumer store, RadioShack, has recently announced its plans to raise funds by the end of 2013. According to anonymous sources connected with the company’s finances, RadioShack, having lost $139.4 million last year, will be raising money through debt-financing in order to prove to suppliers that the company has enough money to support its turnaround.
In order to explore refinancing options, Joe Magnecca, CEO of RadioShack, has hired turnaround adviser AlixPartners LLP and Peter J. Solomon, an investment banker. He also appointed Holly F. Etlin, a managing director for AlixPartners, as RadioShack’s interim chief financial officer.
In the wake of net losses and declining sales, Magnecca is hoping that vendors will supply exclusive products enabling RadioShack to offer customers a unique selection of goods that will set RadioShack apart from competitors. Magnecca has been working on the store level to reduce the number of slow-moving items, like laptops, and to improve major brand sale displays. He hopes that this reduction of store clutter and heightened attention to big brands like Apple Inc., will prove to important vendors like Sprint Corp., AT&T, Samsung Electronics Co., and Garmin Ltd., that “they can place their bets on us, which I believe they are.”
The Fort-worth based company has been reporting net losses for the past six quarters because of competition from Amazon and big retailers like Best Buy Co. A Reuters article from early August also cites executive departures, failure to “become sufficiently hip to woo younger shoppers,” as well as a failure to improve their image as a destination for mobile phones as other causes of this current financial distress. In August, Standard & Poor’s downgraded RadioShack’s debt to a CCC rating, claiming only a “major business turnaround or increased liquidity” could save the company from a possible default within 12 months. Currently, the retailer has enough liquidity to last through 2014.
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