Why RadioShack Corporation Stock Short-Circuited

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of RadioShack Corporation  (NYSE: RSH  ) were getting shocked again today, falling as much as 24% after reports that talks with lenders were slowing its store-closing process.

So what: The electronics retailer had announced at its last earnings report on March 4 that it planned to close up to 1,100 of its 4,300 stores, pending permission from its creditors. Last night, The Wall Street Journal reported that some lenders are resisting attempts to close more than 200 locations, the allowed amount without permission, while others believe the retailer should close as many as 2,000. 

Now what: Same-store sales plummeted in its last quarter and losses have mounted as the chain struggles to survive against the rise of online retail and other industry shifts. Given its declining sales and growing losses, store closings seem like a necessary next step if the company is going to have any hope of returning to profitability. The lender-caused delays are only the latest headache for RadioShack. Its stock has actually fallen more than 35% this week as fellow electronics retailer hhgregg announced disappointing preliminary results earlier this week. Even if RadioShack get its store closures through, the forces pushing the industry downward may prove inescapable.

2 stocks changing the retail world
RadioShack may be starting to look hopeless after today's news, but not all retailers are headed to the dustbin. To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.


Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2919921, ~/Articles/ArticleHandler.aspx, 10/2/2014 8:47:48 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement