Goldman Sachs - New RadioShack Store Isn't the Answer
Analyst Matthew J. Fassler of Goldman Sachs recently visited RadioShack's Corp newest prototype store in New York City. In his view, the store showed innovation, but ultimately the new store format isn't the answer for the struggling retailer.
"Our visit to RSH's newest prototype store in New York Cityrevealed a box that is sleeker, brighter, cleaner, and more contemporary. That said, even at a modest size it appears much larger than necessary to accomplish its core mission: selling high-margin accessories and powering the core wireless franchise," said Fassler.
"RSH's store count (over 4,000 company-owned) and financial constraints are such that we do not view a new format as the answer to the firm's challenges," he added.
On a positive note, Goldman Sachs does not see major problems with Radio Shack's liquidity this year.
"We do note that in our liquidity analysis published April 26, none of our three scenarios questioned the firm’s liquidity this year. We cite this analysis given the upcoming maturity of a convert issue (August) and volatility in the stock last week that led the firm to acknowledge that it has been talking to financial advisers, but has significant liquidity,"