Why RadioShack Corporation Stock Short-Circuited
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of RadioShack Corporation were getting shocked again today, falling as much as 24% after reports that talks with lenders were slowing its store-closing process.
So what: The electronics retailer had announced at its last earnings report on March 4 that it planned to close up to 1,100 of its 4,300 stores, pending permission from its creditors. Last night, The Wall Street Journal reported that some lenders are resisting attempts to close more than 200 locations, the allowed amount without permission, while others believe the retailer should close as many as 2,000.
Now what: Same-store sales plummeted in its last quarter and losses have mounted as the chain struggles to survive against the rise of online retail and other industry shifts. Given its declining sales and growing losses, store closings seem like a necessary next step if the company is going to have any hope of returning to profitability. The lender-caused delays are only the latest headache for RadioShack. Its stock has actually fallen more than 35% this week as fellow electronics retailer hhgregg announced disappointing preliminary results earlier this week. Even if RadioShack get its store closures through, the forces pushing the industry downward may prove inescapable.
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The article Why RadioShack Corporation Stock Short-Circuited originally appeared on Fool.com.Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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