Fitch Downgrades RadioShack (RSH) to CCC
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Fitch Ratings downgraded its long-term Issuer Default Rating (IDR) for RadioShack Corporation (NYSE: RSH) to 'CCC' from 'B-'.
Fitch said:
The downgrade reflects the significant decline in RadioShack's profitability, which has become progressively more pronounced over the past four quarters. Results have been disappointing, due in particular to pressure on the company's mobility segment, leading to a marked deterioration in the company's credit profile.
There is a lack of stability in the business and no apparent catalyst to stabilize or improve operations. In addition, sharp declines in cash flow, together with the expected repayment of the $375 million of convertible notes maturing in August 2013, will materially reduce the company's financial flexibility.
Fitch said:
The downgrade reflects the significant decline in RadioShack's profitability, which has become progressively more pronounced over the past four quarters. Results have been disappointing, due in particular to pressure on the company's mobility segment, leading to a marked deterioration in the company's credit profile.
There is a lack of stability in the business and no apparent catalyst to stabilize or improve operations. In addition, sharp declines in cash flow, together with the expected repayment of the $375 million of convertible notes maturing in August 2013, will materially reduce the company's financial flexibility.
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