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RadioShack Begins Fight for its Life in San Francisco

Company Hopes Remodeled Stores with Interactive Elements Will Give Investors Faith in a Credible Turnaround Strategy
July 30, 2014
As part of its commitment to reinvigorate its stores and bring innovative products to market, RadioShack is opening 21 new interactive remodel stores in the San Francisco Bay area.

The stores provide an updated shopping experience to RadioShack customers in the area, while highlighting key elements from its new store formats and promoting unique products from tech-savvy inventors.

However, as the announcement was being made, Moody’s issued a report speculating that the Fort Worth-based RadioShack has only enough liquidity to keep its batteries charged for just one more year.

"The company's deteriorating liquidity profile and dismal earnings give very little cushion to RadioShack to execute its turnaround strategy over the next several quarters," said Mickey Chadha, a Moody's vice president and senior analyst. "Absent a credible turnaround strategy to improve sales growth and increase earnings, RadioShack will be hard pressed to remain relevant in the increasingly competitive mobile phone and consumer electronics business."

Moody's says that liquidity is adequate for another year, with no debt maturities coming due, but that its base case scenario for RadioShack has the company running through its liquidity by the end of October 2015.

Moody's rates RadioShack Caa2, with a negative outlook.

Unless RadioShack can orchestrate a successful turnaround over the next 12-18 months and improve customer traffic in its stores, Moody's says the company's liquidity will continue to deteriorate and it will start to lose vendor support.

A turnaround is what it is attempting in San Francisco. RadioShack has been open for business in the San Francisco Bay area since 1966 and today is home to more than 60 locations and hundreds of knowledgeable associates.

"As a technology mecca, San Francisco has long been an important market for the RadioShack brand, so it makes sense to open a significant number of our interactive remodel stores for customers in the Bay Area," said Mike DeFazio, senior vice president of store operations at RadioShack. "These stores are built on customer feedback from more than 40 concept stores we have opened in the past year. Customers in the Bay Area will be able to interact with distinctive products before they buy, discover personalized solutions, find new and exclusive items and collaborate with store associates on their next DIY project."

RadioShack began remodeling and opening highly experiential concept stores across the country in July 2013, and has refreshed its more than 4,000 U.S. company-owned stores.

RadioShack is also opening a select number of these sleek, bright, highly experiential stores in neighborhoods throughout the nation. These new, updated stores reflect the company's strides toward reinvigorating its stores, revamping its product assortment and repositioning the brand.

Along with the remodels, RadioShack plans to close 200 stores per year over the next three years.

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