The Deal: RadioShack Hires AlixPartners, Solomon to Attempt Turnaround
NEW YORK (TheStreet) - RadioShack
AlixPartners is doing more than advising--one of the firm's managing directors, Holly Etlin, was named RadioShack's new interim CFO, replacing Dorvin Lively, who is leaving the Fort Worth-based company.
News of the hirings was announced Tuesday along with the company's second-quarter earnings. RadioShack dropped 5.1% to $2.78, paring the stock's 2012 advance to 31%. Shares have lost 79% in the past two years.
RadioShack said it had a net-loss of $53 million for the quarter ended June 30, an increase of 152% from a loss of $21 million for the same period a year ago. Sales were little changed from a year ago at $845 million. The one bright light in the earnings report was an increase of 1.3% in comparable store sales.
Although industry sources said the primary reason for hiring advisers was to help RadioShack restructure its debt--$713 million as of June 30, according to company filings--hiring AlixPartners and Solomon positions the company for a possible sale.
Written by in New York
Chief Executive Joe Magnacca, hired in February to revive the retailer, said in a July 16 interview on CNBC that the company was not being set up for a sale.
In a statement, Magnacca said that "our strategy this quarter was designed to move through unproductive inventory and test a variety of promotional vehicles, which we knew would have an impact on gross margin rate, but would help us identify opportunities to better align our promotional marketing going forward." He said the turnaround would take several quarters.
A revival, Magnacca added, rests on "repositioning the brand, revamping our product assortment, reinvigorating our stores, operational efficiency and financial flexibility."
One source said that if RadioShack's new concept stores proved successful, private equity was certainly an option. In addition to the possibility of a straight buyout, private equity firms could supply the debt financing needed to accelerate a turnaround, if a clear path to growth can be found.
Written by Richard Collings in New York