RadioShack Corp. (RSH) is mired in talks with lenders over its plans to close up to 1,100 stores, the Wall Street Journal reported Wednesday, citing people familiar with the talks. According to the report, the delay in the plan is complicating the consumer electronic goods retailer's turnaround efforts and also intensifying tensions with some lenders.
While reporting its financial results for the fourth quarter in March, RadioShack said it plans to close up to 1,100 underperforming stores in the U.S. as a result of a comprehensive review of its portfolio over the past few months.
The move comes as part of RadioShack's strategy to consolidate store base into fewer locations while maintaining a strong presence in each market. Despite the planned store closures, the company added that it will continue to have a strong presence across the U.S. with over 4,000 stores, including over 900 dealer franchise locations.
However, the WSJ reported that RadioShack's announcement surprised some of its lenders. The company's current credit agreements reportedly allow it to close only about 200 stores without the approval of lead lenders Salus Capital Partners and GE Capital, a unit of General Electric Co. (GE).
In March, RadioShack reported a loss for the fourth quarter that widened from last year, reflecting lower gross margins, significantly higher expenses and lower sales.
The company's net loss for the fourth quarter widened to $191.4 million or $1.90 per share from $63.3 million or $0.63 per share in the prior-year quarter. Net sales and operating revenues for the quarter decreased to $935.4 million from $1.17 billion in the year-ago period.
RSH closed Wednesday's regular trading session at $1.69, down $0.10 or 5.59 percent on a volume of 3.81 million shares. In after-hours, the stock further declined $0.02 or 1.18 percent to $1.67.
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