RadioShack (RSH) is in the middle of yet another turnaround, but could be out of money before it gets very far, according to a new report from Moody's Investors Service.
Analysts at the ratings agency say the retailer could run out of cash as early as October 2015. Investors fled the stock upon hearing the news Tuesday, sending shares down nearly 12 percent to close at just 68 cents.
The report is a severe blow to the chain, which is attempting an overhaul intended to show customers that it sells more than radio scanners and USB cables. As part of its makeover, RadioShack has opened about 40 concept stores featuring a "speaker wall" for comparing speakers, touchscreens with product information and displays of GoPro cameras.
In other words, RadioShack is finally doing what Best Buy (BBY) and other retailers rolled out long ago. Will it be enough to bring back customers who have left for Amazon.com (AMZN) and other rivals?
If an outdated sales strategy was the only headache for RadioShack, it might have a chance. But the company is being hit on all sides with issues that threaten its survival.
Here are six problems dragging RadioShack down:
It hasn't made a profit in nine quarters. It's tough to stay competitive on prices, especially with the cutthroat pricing strategies used by Amazon and Walmart (WMT).
It can't shut down enough stores. Executives wanted to close 1,100 of the chain's 4,300 company-owned locations, but lenders hated the idea. The company's lenders get a say on any plan that shutters more than 200 stores a year. RadioShack is now scaling back its closures.
Sales are plunging. Sales at stores that have been open for at least a year fell 14 percent in the first quarter. There's no sugar-coating a slump like that.
Executives are leaving. Managerial departures over the last year include the chief financial officer, the executive vice president of store operations and the head of strategy.
Its stock could get delisted. The share price hasn't been above $1 since June 19, and the stock could be delisted if it stays below that threshold for 30 trading days in a row. RadioShack has a six-month grace period to get its shares back above $1.
Don't forget that cash problem. The company only had $62 million in cash in May. And while that sounds like a decent amount, consider that its cash pile was $180 million at the end of last year.
"Absent a credible turnaround strategy to improve sales growth and increase earnings, RadioShack will be hard-pressed to remain relevant in the increasingly competitive mobile phone and consumer electronics business," Moody's analyst Mickey Chadha told Reuters.
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