RadioShack’s recent issuance of its annual financials is rough reading for the chain’s remaining fans. It’s even tougher for investors and absolutely harsh for the company’s relatively new executive team. Comp store sales for the year were down 8.8%. For the all-important holiday driven final quarter, comp sales were down a walloping 19%.
Near the top of the company’s recent press release announcing fourth quarter and annual financials for 2013, just below the new corporate logo, were the following leads:
- Plans to close up to 1,100 underperforming stores in the U.S.
- Strong sales growth in Concept Stores
Obviously, the first note is alarming and has created national headlines. Some follow-up stories stressed the loss of approximately 20 percent of the chain’s once enviable total store count. Others seemed even bolder, analyzing the loss of well over 1,000 locations, including a great deal of lost sales opportunities, as well as jobs. At a time when newscasts still wonder when the recessionary recovery will be complete, any company dropping 1,000 plus store locations is cause for major concern.
Actually both of the above press release headers are disturbing. Many agree that the hit commercial of the recent Super Bowl was the RadioShack spot, which employed several celebrities from the past to humorously introduce the company’s new Concept Stores and delineate them from the existing prototypes which have survived the ages. Unfortunately, virtually all of the company’s current 5,000 plus stores continue to embody these relics of store formats past.
While consumer acceptance/joy over the new concept is properly hailed, it must be remembered that currently RadioShack has opened just a handful of these locations. As with any fairly radical new format, there are likely a few bugs to be worked out and a few improvements to be tweaked.
What is disturbing here is the expense and effort required to convert the company’s 4,000 plus remaining, old-world locations to the new concept. Will the new concept improve corporate sales and profits sufficiently to make a companywide, total conversion feasible? After a long string of weak financial reports, can the company even afford to convert all or even most locations?
Many analysts and consumers applauded the Super Bowl ad as an indication that the current management team is certainly headed in the right direction. Several of these observers happily announced their surprise to see this venerable company poking fun at itself and its admittedly out of date store concepts. This was a commercial which was likely to enjoy many repeat viewings for days after the Super Bowl on the Internet and even go viral.
While learning of the proposed 1,100 store closings, several industry analysts proclaimed the move, perhaps too little, too late. Some expect at least another round of closings after this one. Many feel that closing ‘underperforming locations’ should be a process to be reviewed and imposed periodically, not an event, as if out of desperation.
Current CEO Joseph C. Magnacca just celebrated his first anniversary with the retailer. He has a strong merchandising background, which included transforming New York City drug chain giant Duane Reed into the ground breaking force it became and then helping integrate the chain into Walgreens after its acquisition. Many feel that if anyone can right the RadioShack ship, it is Mr. Magnacca.
While we are saddened by the loss of so many stores and jobs, perhaps this is a sensation to which we must prepare to become accustomed, as we follow the fortunes of RadioShack.
