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3 Dead Retail Stocks Walking

SHLD, RSH, and BKS are staring at life support

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RadioShack NYSE:RSHConsumer electronics supplier Radioshack (RSH) can best be summed up in my most recent visit: I bought a plug for my electric guitar cable and left.Total time in the store: maybe 2 minutes.

Bottom line? There aren’t nearly enough people like me making 2 minute, under $10 transactions to make ends meet.

Radioshack executives know this, and they’ve gone out looking for help in shoring up balance sheet and liquidity issues to help the cause. But it’s a short term hope: sales are at best flat, margins continue to get squeezed, and the losses keep piling up. Second quarter  revenues came in at $844.5 million, just under last year’s $849 million, but ahead of analyst estimates of $816 million.

However, gross margins came in at 37% compared to 40%, and  its net loss of 53 cents per share was much worse than last year’s 21 cents, and analyst estimates of 21 cents per share. Cash on hand is now under $500 million, and free cashflow is non-existent.

Worse yet, S&P cut its debt rating — and RSH has plenty of debt, by the way — to a non-investment grade ‘CCC’, with a warning that “a default could occur within 12 months, absent a major business turnaround or increased liquidity.”

Perhaps sooner than that…

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