RadioShack (RSH) Reports Q2 Loss of $1.00/Share; Working on Possible Debt Restructuring

RadioShack (NYSE: RSH) reported Q2 EPS of ($1.00), versus ($0.62) reported last year. Revenue for the quarter came in at $673.8 million, versus $861.4 million reported last year.

Comps fell 20 percent.

Joseph C. Magnacca, chief executive officer, said, "For the past 18 months we have been working hard on our turnaround plan. While we are advancing on many fronts, we may need additional capital in order to complete our work. As a result, we are actively exploring options for overhauling our balance sheet and are in advanced discussions with a number of parties. We are also working with our key financial stakeholders, including our existing lenders, bondholders, shareholders and landlords seeking to create a long-term solution. This may include a debt restructuring, a store base consolidation program, and other measures to make significant reductions in our cost structure. The details of a recapitalization have yet to be finalized, and we are reviewing several alternatives, some of which would require consent from our lenders. There is no pre-determined outcome to this work and, of course, we cannot be certain as to the outcome from the current discussions. Our highest priority is working on a solution to maximize the value to all of our stakeholders.

"As for the second quarter, our retail business, which represents approximately half our sales, saw an improving sales trend. That trend is continuing into our third quarter as our turnaround strategy gains traction on the retail front. We are working to lessen our dependence upon the mobility business as we continue to reinvigorate our store experience and revamp our product assortment. We're seeing strong consumer response to new offerings such as our Fix It Here program, where we can quickly fix mobile phones right in our stores, and we are also beginning to see the effect of our pipeline of innovative and differentiated products.

"At the same time, we have been challenged by the persistent industry-wide decline in consumer electronics and soft mobility market," Mr. Magnacca continued. "The postpaid mobility business drove the majority of the weak performance this quarter due to lackluster consumer interest in the current handset assortment, consumers waiting for an iconic handset launch this fall, and intense promotional activities by the wireless carriers. We are working to address our challenges head-on and focus on profitable sales by improving the technology we use to sell mobile phones and bringing in new wireless offerings. We believe that, long-term, our adjusted approach to mobility will position it as an important contributor to our overall business."

Mr. Magnacca concluded, "Our entire team is focused on executing our vision, adapting to the environment, managing our balance sheet, and driving sustainable change."

CASH, LIQUIDITY AND CAPITAL SPENDING

The Company ended the quarter with total liquidity of $182.5 million at August 2, 2014, including $30.5 million in cash and cash equivalents and $152.0 million of availability under the 2018 Credit Agreement. This availability is net of letters of credit totaling $89.4 million and $43.0 million in borrowings outstanding at August 2, 2014. The Company's total debt was $658.0 million at August 2, 2014, which matures between 2018 and 2019.

For earnings history and earnings-related data on RadioShack (RSH) click here.

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