RadioShack is running out of cash: Moody's

29/07/2014
Moody's on Tuesday issued a warning that RadioShack's turnaround plan may never come to fruition.
The credit ratings agency said that although the struggling electronics chain should have enough liquidity to make it through the current fiscal year, it is "increasing likely" it will run out of cash by the fiscal third quarter of 2015.
"Barring a cash infusion, RadioShack will not have much of a cash cushion to draw upon as it scrambles to remain relevant in the increasingly competitive mobile phone and consumer electronics business," Moody's said in a note on Tuesday.

Unless RadioShack can orchestrate a successful turnaround strategy over the next 12 to 18 months and improve customer traffic in its stores, we think the company's liquidity will continue to deteriorate and it will start to lose vendor support."
RadioShack did not immediately respond to request for comment.
In the most recent quarter ended May 3, the company posted an operating loss of $81 million. Over the same period, its cash balance shrank to $62 million, Moody's said. The agency has a Caa2 negative rating on the company.
Earlier this year, RadioShack had announced plans to close about 1,100 U.S. stores. But a disagreement with lenders caused the chain to dial back this plan to close up to 200 stores a year over the next three years.
Even so, Moody's said, the store closures "would have been only a partial fix to the cash problem."
On Friday, the New York Stock Exchange notified the struggling electronics chain that it is not compliant with its requirements because the average closing price of its stock has fallen below $1 for 30 straight trading days.
Despite the warning, RadioShack's shares will continue to trade on the exchange, and it has six months to regain compliance.
The company's shares were slightly lower, near 77 cents.

By: cnbc.com

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