CHICAGO (AP) — In a story May 15 about a Fitch downgrade of RadioShack Corp., The Associated Press reported erroneously the location of RadioShack's headquarters. The company is based in Fort Worth, Texas.
A corrected version of the story is below:
Fitch cuts RadioShack to low end of junk territory
Fitch pushes RadioShack deeper into junk territory after creditors block store closings
CHICAGO (AP) — Fitch cut its rating on RadioShack on concerns that the retailer may not have sufficient cash flow to make it through the year.
RadioShack announced plans in March to close as many as 1,100 stores after slower sales were causing losses to pile up. But the retailer failed to get the approval from lenders necessary for the plan and said last week that it will close fewer stores and find other ways to cut costs.
Fitch Ratings said Thursday that without the massive inventory liquidation, the company's cash flow and profit could suffer. The rating agency said it is increasingly concerned about RadioShack's ability to operate beyond this year due to its cash burn.
RadioShack, based in Fort Worth, Texas, declined to comment Thursday. But it said in a regulatory filing in March that if it was unable to get lender approval for the larger store closure plan that it would have enough liquidity to meet its obligations through 2014.
The company had total liquidity of $555 million at the end of 2013, compared with $927 million in the previous year, according to the rating agency.
Fitch dropped RadioShack's long-term issuer default rating two notches Thursday to "CC" from "CCC," near the bottom of junk territory. The ratings agency said that it is increasingly likely that RadioShack will need to restructure its debt within the next 12 months.
Shares of RadioShack Corp. fell a penny to $1.33 in afternoon trading. They have fallen almost 50 percent so far this year.