Business & Real Estate

Struggling RadioShack closes two Sacramento stores

Traders work on the floor of the New York Stock Exchange near the post that handles Radio Shack, Friday, June 20, 2014.
Traders work on the floor of the New York Stock Exchange near the post that handles Radio Shack, Friday, June 20, 2014. AP

Beleaguered electronics retailer RadioShack Corp. confirmed Wednesday that it recently closed two Sacramento stores but maintains that it still has a broad presence in the region.

In an email, the company said it closed stores at 4500 Freeport Blvd. near Land Park and in the Strawberry Creek Shopping Center at 8241 Bruceville Road.

“We still maintain very good coverage with stores still in place” throughout the region, the company’s emailed statement said. RadioShack’s website on Wednesday showed 23 stores within a 25-mile radius of downtown Sacramento, including outlets in Roseville, Folsom, Elk Grove, Citrus Heights, Rancho Cordova, West Sacramento, Davis and Woodland.

Overall, the company lists 529 California stores. Reached by phone, managers of five local RadioShack outlets declined to comment about the store closings.

With more than 4,300 company-owned stores nationwide, RadioShack has been struggling to stay afloat amid intense competition from other brick-and-mortar electronics chains and online players such as Amazon.com. In 2013, it underwent a nationwide remodel of its U.S. stores, with remade interiors, new signage and a “Do it Together” moniker designed to appeal to neighborhood do-it-yourselfers.

It’s also going through a nasty spat with one of its lenders.

Trading in RadioShack shares on the New York Stock Exchange was halted Tuesday after the Texas company publicly disclosed its dispute with Salus Capital Partners. Salus contends that RadioShack breached certain terms of its $250 million loan.

In a media release issued Tuesday, RadioShack CEO Joe Magnacca denied the Salus claim and said, “We will do everything we can to assure that these claims do not distract us from our ongoing efforts to rationalize our capital structure and transform our business.”

It was the latest in a series of flaps between RadioShack and its lenders.

RadioShack announced in March that it would close up to 1,100 of its stores in the United States, which would still leave it with about 4,000 locations. However, those plans subsequently were scaled back amid continued disagreement with its lenders. RadioShack maintains that lenders are pressing it to pay down debt even as the firm endeavors to enact cutbacks – such as store closures – that it says would improve its financial footing.

Magnacca repeated his frustration in Tuesday’s statement: “Despite their intimate knowledge of the challenges that RadioShack faced when they extended credit to us late last year, our current term lenders have repeatedly blocked our efforts to accelerate and intensify our turnaround and make smart decisions for our business.

“Now, prompted by their narrow self-interest, they appear to be trying to manufacture a problem during the critical holiday shopping season in an effort to get out of a loan on which they have already reaped more than $35 million in fees and interest payments.”

Salus did not comment on Magnacca’s remarks.

Peter Schaub, a New York-based marketing and branding expert, said Wednesday that “RadioShack is really walking a tightrope without a net. … On one hand, they want to cut back and shore up their financial house, but it sounds like the lenders don’t want to be left out in the cold.

“It’s tough for RadioShack. BestBuy and Amazon have taken over what used to be their turf many years ago, and I think it will be tough for (RadioShack) to build itself back up to anywhere near what they once were.”

With corporate roots dating back to the early 1920s, RadioShack was an iconic brand in consumer electronics for decades. In 1977, it offered what it called the first mass-produced personal computer, the TRS-80. But its dominance in consumer electronics was challenged starting in the 1980s by big-box retailers, such as Best Buy and others.

In September, RadioShack warned that it might need to file for Chapter 11 bankruptcy protection, but it subsequently announced an agreement with investors to restructure its debt. In October, the company also instituted cost-savings measures that included “reconfigured store hours at select locations,” which RadioShack said would reduce annual operating costs by $35 million.

RadioShack said its global retail network now includes more than 4,300 company-operated stores in the United States and Mexico and more than 1,200 dealer franchise stores in 25 countries.

On Wednesday, RadioShack shares closed at 62 cents, down 10 cents, or 13.6 percent, on the NYSE.

Call The Bee’s Mark Glover, (916) 321-1184.

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