RadioShack announced in a press release the company's plans to close hundreds of stores, foreshadowing a massive layoff.
According to Joseph C. Magnacca, RadioShack CEO, they are focused on reducing costs to avoid negative cash flow. Revenues may be smaller, but they believe that it will be more substantial than recent sales and can lead to a healthy mobility business.
“We have also begun a detailed set of cost reduction initiatives designed to enhance earnings by over annually, encompassing a range of operating cost reductions related to headquarters, field, stores, and store support to improve operational efficiency and right-size our business, as well as the benefit of targeted store closures,” said Magnacca.
In 2014, RadioShack already closed 175 locations and plans to shut down a thousand more. Though no specifics were revealed on how many employees will be affected, half of the field managers will be cut, which can save the company $17 million per year.
The RadioShack CEO said that the sales slid by 16.1% during the last quarter and a 13.4% decline in same-store sales. However, there's only a 2% decrease in comparable store sales compared to the previous year.
There's a reported $161 million loss in sales during the last quarter, 18% more than its loss during the same quarter in the previous year.
In June, RadioShack's stocks nosedived below $1, which is the minimum value to stay in the New York Stock Exchange. On Thursday morning, the day it announced the company plans, it dipped below 50 cents.
The electronics retail store manages to stay afloat and avoid bankruptcy by raising funds from investors and lenders. In September, RadioShack admitted that they might need to file for bankruptcy protection and mentioned it again in the press release.
The company denied claims from lenders that RadioShack has defaulted $250 million in loans.
