RadioShack's contract to operate 417 cell phone kiosks inside Sam's Club stores will end soon, RadioShack said, and Sam's Club plans to take over management of the kiosks. The transition likely will be complete by June 30.
RadioShack announced the news in a Securities and Exchange Commission filing, and said it likely will see its kiosk profits decline by $10 million to $15 million this year because of the shift.
However, the company is trying to make up for its losses by ramping up its wireless efforts in Target stores. RadioShack said it will double its presence in Target stores, from about 850 stores today to 1,450 Target stores by June 30. The company has been operating the wireless department of many Target stores since November 2009.
But analysts are not so bullish on the plan. According to the Wall Street Journal, analysts at FBR Capital Markets predict that the loss of the Sam's Club kiosks will hurt RadioShack earnings by more than expected because the Sam's Club kiosks are "more productive, mature and larger" than the ones at Target. The Sam's Club kiosks sell phones, accessories and plans from T-Mobile USA, Sprint Nextel (NYSE:S) and Verizon Wireless (NYSE:VZ).
The end of the Sam's Club kiosk deal also will put an end to RadioShack's relationship with Verizon, the nation's largest wireless operator.
RadioShack has been aggressively trying to expand its presence in the mobile retail space, likely in an effort to counter increasing pressure from competitors Best Buy and Wal-Mart.
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