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RadioShack is expected to announce store closings

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Posted at 5:34 PM, Feb 02, 2015
and last updated 2015-02-02 17:51:39-05

RadioShack is starting its new fiscal year this week with huge clearance signs on many of its store windows and rumors that a bankruptcy filing is coming soon.

The struggling Fort Worth-based consumer electronics retailer warned in September that its reorganization efforts might require the protection of the bankruptcy court.

At the very least, the start of the fiscal year means the company can close more stores without getting in trouble with its lenders.

RadioShack’s fiscal year ended Sunday, which means CEO Joe Magnacca can close 200 stores without altering a debt agreement.

In the last couple of weeks, RadioShack store windows have been covered with big red, yellow and black signs that say: “Clearance Blowout! 20% to 50% off.”

The signs stop short of saying “Going Out of Business” but are similar to closeout sale signs common in retail.

The signs have popped up across the country.

RadioShack hasn’t announced another round of store closings, but local media outlets from California to West Virginia are reporting that some store managers have said that they have been told their stores will be closing over the next 30 to 90 days. Some Texas store employees are saying the same thing.

Earlier this month, RadioShack notified local officials that it’s closing a 30-year-old distribution center in Woodland, Calif., in March.

Store closings and staff cuts in corporate facilities are part of the plan Magnacca outlined last month to cut RadioShack’s expenses by $400 million a year.

The latest statements from the company indicate that Magnacca continues to try to convince the company’s lender, Salus Capital Partners, that RadioShack should be allowed to close 1,000 unprofitable stores.

RadioShack received a five-year, $250 million term loan from Salus in December 2013. That loan specifically prohibits RadioShack from closing more than 200 stores a year. It closed 175 locations in 2014.

The last store count that RadioShack reported was 4,216 company-owned stores as of Nov. 1, but that number only included about 60 of the 2014 closings.