Don Sneigowski at BlueMauMau reorts that troubled RadioShack Corporation announced on Monday that its new chief financial officer John Feray had left the firm on Friday for “personal reasons” and that Holly F. Etlin would replace him. Feray had only been with the 4,485 store chain since February. He leaves amidst a frenzy of activity by the company to secure financing to at least keep it solvent until the end of the Christmas buying season.
Ms. Etlin, a managing director of AlixPartners and longtime RadioShack advisor, served as RadioShack’s interim CFO from July 2013 to February 2014.
The company announced in 2013 that it was in trouble and that it would cut its company-owned stores by a thousand as well as trim costs. However, its lenders objected, telling RadioShack that it could only close 200 stores this year without further approval.
On September 11, RadioShack’s CEO Joe Magnacca stated that his company was running out of cash. “For the past 18 months we have been working hard on our turnaround plan,” he said in a press release. He added, “While we are advancing on many fronts, we may need additional capital in order to complete our work.”
The Wall Street Journal reported that RadioShack was in fact negotiating with investment bank UBS and hedge fund Standard General to secure $585 million “to keep the struggling electronics retailer out of bankruptcy.”
The deal to save the brand is not certain.
What will happen to RadioShack’s Dealers?
With luck, the financing deal will go through. A buyer or group of buyers could also emerge to take over the brand and implement their vision.
But in the foulest scenario, would franchise owners be able to survive should their franchisor RadioShack liquidate? As a whole, it is doubtful. RadioShack’s dealers have no franchisee association that can collectively deal to pick up the pieces of a failed brand. They also are conditioned to look one way, to their franchisor, for instructions on store operations, remodeling, support, branding, franchise sales, marketing and merchandise. Worse yet, these electronic retailers occupy a changing and unforgiving sector of the retail market that is strewn with dead bodies — think of giant electronics retailer Circuit City liquidating in 2009 or Ultimate Electronics in 2011. RadioShack itself has not been able to reverse same-store sales (WSJ $$) that have plummeted ever deeper into the red since 2009.
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