RadioShack yesterday transmitted the official word on reports that it would close a bunch of the stores it operates and the number was even higher than the previous speculation: up to 1,100, which represents almost 25% of the current retail locations. The news came in a fourth-quarter 2013 earnings report that showed a net loss of $191.4 million — more than three times what the retail chain lost a year earlier. Revenue ($935.4 million) was down 20%.
“RadioShack's CEO, Joe Magnacca, commented that the results were catalyzed by poor holiday sales, advertising and promotional costs, and a very soft ‘mobility marketplace,’” quoth “Quoth the Raven” on Seeking Alpha, which also has a transcript of the earnings call with analysts. “You know those 17-year-old kids that really want to sell you a cell phone when you step into the store? They're not pulling their weight.”
But the chain intends to stock up on “knowledgeable store associates who live and breathe technology,” Magnacca said — the type of adviser “that big-box retailers typically lack who can guide customers through a bewildering array of new electronics devices,” as Paul Davidson and John Waggoner report in USA Today.
Magnacca also mentioned a holiday season with fewer shopping days between Thanksgiving and Christmas, bad weather and “disruption in our stores as we executed our strategy to remove the duplicate, end-of-life inventory out of all of our stores, while at the same time we were merchandising all of those stores.”
That translates into: “We were trying to do too much too quickly,” as he also said, citing as an example the removal of “around 100 SKUs that sill had sales potential.” But on the bright side, he pointed out that “we have three new executives in charge of the impacted areas, with over 60 years of combined experience, all of whom joined in the last 120 days.”
Magnacca was also optimistic about the company’s plans to update dozens of its stores, writes the Los Angeles Times’ Ricardo Lopez, which will “allow consumers to test out gadgets and interact with sales staff.”
Lopez further reports that Magnacca said the chain would “focus on keeping items stocked that it promotes in weekly ads. Another area the company wants to improve is selling new, exclusive products at its stores. It recently announced a partnership with Quirky, a New York invention company, to stock its products in RadioShack stores.”
Maria Halkias reports in the Dallas Morning News that “it’s going to be a while before stores start closing because RadioShack’s lenders have to approve the significant 25% decline in the store base.”
And it “might close fewer stores in places where landlords agree to drop their rent,” the Wall Street Journal’s Drew FitzGerald and Emily Glazer report. “But the chain made it clear that hundreds of stores weren't expected to be profitable any time soon, often because of overcrowding.”
“Within five miles of my home [in Fort Worth, Tex.], I have eight RadioShack locations,” Magnacca said during the call.
B. Riley & Co analyst Scott Tilghman “agreed that the company had to shut down its worst-performing stores to stay afloat. But the closings will partly negate its chief competitive advantage — convenient locations,” he maintained to USA Today’s Davidson and Waggoner.
“You lose some of that convenience store aspect they've relied on," says Tilghman. “You have to pass a RadioShack on the way to the grocer. If all of a sudden that store is closed, I'm not going to another RadioShack.”
Today, of course, more people pass another Amazon.com on the way to the Google.com, which leads to the hed on Derek Thompson’s story in The Atlantic[.com]: “RadioShack Is Doomed (and So Is Retail).”
“As ingeniously self-deprecating as RadioShack's Super Bowl commercial was, its finances are sadly even more proficient at making a mockery of the company,” Thompson writes. He later points out that last year he pointed out that the confluence of e-retail and increasingly efficient global sourcing and stocking (i.e.: the Amazon & Wal-Mart Effect) would eventually gut retail employment.”
That hasn’t happened yet, admittedly, but “with $600,000 in sales per employee, Amazon is 3X-4X more efficient than the stores it’s eating,” Thompson maintains.
Similarly, the hed on a blog post about Radio Shack in The Economist[.com] is “Dead brand walking.” Writes “P.H.”: “Ask Americans under the age of 30 what they buy at ‘The Shack,’ and you will be greeted with a blank look.”
That’s a bleak picture indeed, suggesting that all those knowledgeable nerds “who live and breathe technology” but don’t invent it may wind up back in our basements playing videogames and watching re-runs from the ’80s.