Sales for the first quarter fell 13% to
EBITDA at negative
RadioShack's liquidity is dwindling. Fitch expects negative free cash flow of
Fitch believes RadioShack does not have material sources of liquidity beyond its revolver, as virtually all of its assets have been pledged to its credit facilities. Fitch expects excess liquidity to be very tight as we approach peak seasonal borrowings, which could prompt a restructuring before year end.
Absent an agreement with its lenders, it appears that RadioShack will only be able to close 200 stores in 2014, down from its earlier plan to close up to 1,100 stores. In Fitch's view, closing fewer stores will be a drag on profitability and, more significantly, free cash flow, as it will not provide the much-needed funds from inventory liquidation that RadioShack was anticipating.
Fitch downgraded the long-term issuer default rating for RadioShack Corp. to 'CC' from 'CCC' on
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
Source: Fitch Ratings
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