Ultimate Electronics hints at bankruptcy
Friday, December 17th 2004, 12:27 pm
By: News On 6
THORNTON, Colo. (AP) _ Ultimate Electronics Inc., which operates 64 stores in 14 states, has told federal regulators it probably won't have enough cash to fund operations past the fourth quarter that ends Jan. 31.
The retailer's quarterly report, filed with the Securities and Exchange Commission on Thursday, said the company may not stay afloat even that long.
The report also said bankruptcy is a distinct possibility, even if the company manages to raise $25 million in financing.
Ultimate listed several reorganization scenarios in the filing, including renegotiating leases, closing stores and selling assets. Closing stores would likely mean pulling out of at least some markets, said analyst Gregory McKinley, vice president of Dougherty & Co.
McKinley said Ultimate's stores are too big.
``The real problem is, they're attempting to compete in the high-end segment of the consumer electronics market, but they're doing it in a 30,000-square-foot store,'' he said. ``I don't believe there are 30,000 square feet of high-end electronics. So, part of the store _ the majority of it _ ends up competing on commodity products with Best Buy and Circuit City.''
The company has stores in Arizona, Idaho, Illinois, Iowa, Kansas, Minnesota, Missouri, Nevada, New Mexico, Oklahoma, South Dakota, Texas and Utah. They operate under the SoundTrack name in Colorado.