Will 1,100 Stores Closures Save RadioShack? Probably Not

Mar 4 2014, 1:40pm CST | by

It’s been a tough few years for RadioShack topped off with an ugly 2013.

The retailer announced fourth quarter and full year 2013 earnings today. The Fort Worth, TX-based company posted a$344 million operating loss for the year, and a same-store-sales drop of 19% for the fourth quarter. Not only that, RadioShack will be closing up to 1,100 stores across the country, and that may not be the end of store closings.

The dismal news is killing the company’s stock. RadioShack shares are plunging more than 16% to about $2.26 this afternoon.

What’s going on with RadioShack lately? The electronics retailer has long been challenged by e-commerce businesses like Amazon, but things have been particularly tough for RadioShack of late.

It may be that time is running out for the company. Last year it named Joseph C. Magnacca as its fourth CEO in three years. Magnacca was formerly a Walgreen Co executive before joining RadioShack.

On the call with investors today, Magnacca said disappointing earnings were the result of poor foot traffic, fewer shopping days between Thanksgiving and Christmas and bad weather. Surely, those are reasons just about any retailer could cite, but RadioShack’s quarter was particularly bad.

Magnacca was quick to point out that his turnaround plan for RadioShack, which he announced in July, will take time and that results will vary.

Here’s a quick breakdown of his plan:

  1. Repositioning the brand. This concept is exemplified by that 1980s Superbowl ad RadioShack won much deserved acclaim for.  The company is promising is new, snazzier version of itself.
  2. Revamping the product assortment. In short, give customers more products they want and get rid of stuff they’r not buying. Magnacca promised real changes in product this summer, and noted the company is moving back to its “roots”by offering newer products ahead of the curve. He’s also betting big on his employees who he says are capable of educating consumers on new products.
  3. Reinvigorating the stores. Some RadioShack stores are getting makeovers. Well lit, clean lines and modern design will highlight top products. These concept stores include things like interactive speaker walls, and live devices that customers can use.
  4. Operational efficiency. 1,100 store closures shrink company owned stores by about 25%. Magnacca says these were the lowest performing stores, and ones that were expected to generate losses. The company still has about 4,000 locations.
  5. Financial flexibility. New financing of about $835 million from lenders including GE Capital. The financing includes $585 million in a new asset-based lending facility, and a $250 million secured term loan.

So will it all work?

Brian, Sozzi, CEO and Chief Equities Strategist at Belus Capital Advisors, doesn’t think so. He says the 1,110 stores closures are just the beginning of RadioShack’s slow demise. “I think they will be gone. This is just the first wave. You’ll see more closures over the next few years, then it will be out,” he says.

What about all of Magnacca’s big plans? Sozzi points out that RadioShack’s new concept stores are hardly new concepts at all. “They’re like all the old RadioShack stores but with a new paintjob,” he says. Plus, the concept stores won’t be available in all locations.

It may take a lot to keep RadioShack alive. Magnacca has already been successful on they marketing and branding front with a handful of successful commercials. The challenge, however, is to make sure that branding message is translated in stores, and ensuring that consumers who visit are not disappointed to see the same old RadioShack.

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Bird flu hits third poultry farm in Netherlands
The Hague, Nov 22 (IANS) An outbreak of bird flu was detected at a third Dutch poultry farm, the country's ministry of economic affairs announced Friday.
 
 
Hollande to visit Guinea next week, focus on fighting Ebola
Paris, Nov 22 (IANS) French President Francois Hollande will visit the West African countries next week, including the Ebola-hit Guinea-Conakry Nov 28 and will focus on ways to eradicate the deadly virus, media reported Friday.
 
 
Carla Bruni to lend voice to combat Ebola
Paris, Nov 22 (IANS/EFE) Former model and former first lady of France, Carla Bruni, will lend her voice to the French version of the song "Do They Know It's Christmas?" to raise funds to help combat Ebola.
 
 
Spanish health worker flown home after possible Ebola contagion
Madrid, Nov 21 (IANS) A Spanish health worker with Doctors Without Borders (MSF) arrived back in Spain Friday morning from Mali after being deemed at risk of contagion from the Ebola virus.
 
 
 

Latest from the Network

Bayern Munich's Schweinsteiger to be back in action
Berlin, Nov 22 (IANS) Bayern Munich midfielder Bastian Schweinsteiger will recover in time for Saturday's Bundesliga home game against Hoffenheim. Bayern coach Pep Guardiola confirmed Schweinsteiger's return, but did...
Read more on Sport Balla
 
Meryl Streep a great actress: Julianne Moore
Los Angeles, Nov 22 (IANS) Actress Julianne Moore says she has always admired Meryl Streep and credited the 65-year-old for inspiring her to become an actress. "I can remember when Meryl Streep was on the cover of...
Read more on Celebrity Balla
 
Bird flu hits third poultry farm in Netherlands
The Hague, Nov 22 (IANS) An outbreak of bird flu was detected at a third Dutch poultry farm, the country's ministry of economic affairs announced Friday. The latest outbreak occurred at a poultry farm in Kamperveen...
Read more on Business Balla
 
Hollande to visit Guinea next week, focus on fighting Ebola
Paris, Nov 22 (IANS) French President Francois Hollande will visit the West African countries next week, including the Ebola-hit Guinea-Conakry Nov 28 and will focus on ways to eradicate the deadly virus, media...
Read more on Business Balla
 
Jennifer Aniston wants to work with Benedict Cumberbatch
Jennifer Aniston thinks she has recruited Benedict Cumberbatch to star in 'Horrible Bosses 3'. The 45-year-old actress admits she and her 'Horrible Bosses 2' co-stars Jason Bateman, Jason Sudeikis and Charlie Day...
Read more on Celebrity Balla
 
Harry Styles is embarrassed to wear a disguise
Harry Styles is too embarrassed to wear a disguise. The One Direction heartthrob admits it's difficult for him and bandmates Liam Payne, Niall Horan, Louis Tomlinson and Zayn Malik to go unrecognized when they're trying...
Read more on Celebrity Balla
 
The Best Black Friday iPad Deals
The Amazon Black Friday 2014 Sale has been released. The Amazon Black Friday 2014 begins earlier than ever before. In past years the Amazon Black Friday deals week started on Sunday.Besides Amazon, Walmart has kicked...
Read more on Apple Balla
 
Taylor Swift is obsessed with coffee
Taylor Swift says her next boyfriend will have to compete with coffee for her love. The 'Blank Space' hitmaker, who has been single since splitting from One Direction star Harry Styles in early 2013, is obsessed with...
Read more on Celebrity Balla
 
Courteney Cox is hosting a Thanksgiving bash
Courteney Cox is hosting Thanksgiving dinner for 30 people. The 50-year-old actress, who has daughter Coco, 10, with ex-husband David Arquette, and fiancé Johnny McDaid are throwing a special celebration for the...
Read more on Celebrity Balla
 
Enrique bags three Latin Grammy Awards
Las Vegas, Nov 22 (IANS) Singer Enrique Iglesias received three trophies at the 15th annual Latin Grammy Awards held at MGM Grand Garden Arena, here. The singer accepted the awards from half-way around the globe from...
Read more on Celebrity Balla