Struggling electronics and wireless retailer RadioShack said it will shutter as many as 1,110 stores across the United States as it seeks to turn itself around with a smaller footprint.
The store closures, representing around a fifth of the company's total stores, will still leave the company operating in 4,000 locations, which includes 900 dealer franchise locations. RadioShack did not indicate how long it will take to close the "underperforming" stores but the company seems intent on moving ahead swiftly. Presumably, RadioShack will also be shedding jobs as it closes the locations.
The closures are also much larger than had been expected. Last month the Wall Street Journal reported, citing unnamed sources, that the company was planning to close around 500 locations in the coming months.
"Our focus on the brand, our operations, and the in-store experience has been unfolding in parallel with a strategic review of our store footprint," CEO Joe Magnacca said in a statement. "Over the past few months, we have undertaken a comprehensive review of our portfolio from many angles--location, area demographics, lease life and financial performance--in order to consolidate our store base into fewer locations while maintaining a strong presence in each market."
The company said it suffered in the fourth quarter from "lower store traffic, intense promotional activity particularly in consumer electronics, a very soft mobility marketplace and a few operational issues." RadioShack posted a $191.4 million net loss in the period, wider than the $63.3 million loss in the year-ago period, as total revenue dropped 20 percent to $935.4 million.
RadioShack has been trying to update and improve its brand image. In an advertisement during the Super Bowl in February, RadioShack made fun of itself by noting that "the 80s called; they want their store back." Then, in the ad a legion of 80s cultural icons ranging from the demonic doll Chucky to Hulk Hogan, Alf and Jason from the "Friday the 13th" series take apart the store and a gleaming new store is revealed. According to TV and video advertising analytics firm Ace Metrix, the ad was the fourth-most effective that ran during the Super Bowl.
Still, RadioShack faces an uphill climb, especially in mobile retailing. Best Buy, which has also suffered from recent financial struggles, was the largest single retailer for mobile phones in the United States with 13 percent of sales, according to a November 2013 survey from Consumer Intelligence Research Partners. The CIRP survey found that Apple (NASDAQ:AAPL), which of course only sells iPhones in its stores, accounted for a full 11 percent of U.S. mobile retail sales. Big box retailers such as Target, Walmart and Costco collectively made up 12 percent of sales, while Amazon (NASDAQ:AMZN) made up 7 percent of sales and eBay got 2 percent. RadioShack wasn't listed in the CIRP survey.
- see this release
- see this WSJ article (sub. req.)
- see this CNET article
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