-- In our view, U.S. consumer electronic goods and services retailer
RadioShack's continued poor operating and financial performance trends will
continue over the near term because of fierce competition and a mix shift
toward lower-margin mobility products.
-- We believe that it will be very difficult for the company to improve
its performance and gross margin in the next year, given the changing industry
dynamics, mobility accounting for more than 50% of sales, the lack of a
permanent CEO (with a comprehensive strategy for the company) and chief
merchandising officer .
-- We are lowering our corporate credit and senior unsecured debt ratings
on the company to 'CCC+' from 'B-'.
-- The outlook is negative, reflecting our view that if there is
deterioration in the company's liquidity position, we would consider lowering
On Nov. 21, 2012, Standard & Poor's Ratings Services lowered its corporate
credit and senior unsecured debt ratings on Fort Worth, Texas-based RadioShack
Corp. to 'CCC+' from 'B-'. The outlook is negative.
The recovery rating on the senior unsecured debt remains '4', indicating our
expectations for average (30% to 50%) recovery in the event of a payment
The downgrade of RadioShack reflects our view that it will be very difficult
for the company to improve its gross margin in the fourth quarter of this
year, given the highly promotional nature of year-end holiday retailing in the
wireless and consumer electronic categories. It is our belief that all
segments of the company's business will remain under margin pressure for 2012
and into 2013.