The chain traditionally has been able to charge higher prices for more personalized service. Its private label products, he said, will likely struggle as shoppers place a higher premium on branded offerings. Meanwhile, he says, RadioShack's average 2,400-square-foot outlets are too small to offer the wide product variety consumers seek. And, he says, Best Buy has upped the ante, improving its customer service with "store within a store" displays for brands such as Samsung and Microsoft. But Tilghman says Best Buy and others increasingly offer that. Several years ago, RadioShack drew customers who sought one-stop-shopping for mobile phones.
"We believe our fourth-quarter" results do not reflect the progress the company is making. "The RadioShack turnaround will take time, and results will vary," Magnacca said. He added that the company's strength lies "in the power of our people." "We're really dialing up the experience in our stores and differentiating ourselves from big-box retailers," Magnacca said. It also wants to roll out more private-label products, such as headphones and speakers. He said RadioShack wants to parlay such assets to sell solutions in an increasingly complex environment in which mobile phones, tablets and other devices are often linked. It plans to roll out such outlets more widely. Over the past year, the retailer has opened about two dozen "concept stores" that sport open, gleaming designs and let customers interact with products. Magnacca said the company's turnaround hinges largely on a knowledgeable sales force that big-box retailers typically lack who can guide customers through a bewildering array of new electronics devices. If all of a sudden that store is closed, I'm not going to another RadioShack." "You have to pass a RadioShack on the way to the grocer. "You lose some of that convenience store aspect they've relied on," he says. But the closings will partly negate its chief competitive advantage - convenient locations. Tilghman agreed that the company had to shut down its worst-performing stores to stay afloat. He said the company is "overstored" in some markets, with multiple outlets within miles of each other. Magnacca said the closures will affect lower-performing stores that were expected to lose money over the next year. estimated that 5,000 to 10,000 employees will be affected by the store closings, though some of those workers likely would be moved to other locations. Among other problems, he said the company cut some product lines "too deeply" and didn't have enough in-demand products in stock.Īnalyst Scott Tilghman of B. "We were trying to do too much too quickly" to turn around the company, RadioShack CEO Joseph Magnacca told analysts on a conference call. For the year, the company lost about $400 million, vs. Sales at stores open at least a year were down 19%, in part because of weak sales in the mobile phone business. Revenue fell 20% from the same period in 2012 to $935 million. In the fourth quarter, the company lost $191.4 million, or $1.90 a share. RadioShack stock (RSH) fell 17% to close at $2.25 a share in regular trading Tuesday.
Yet some analysts say the retailer faces an uphill climb as it struggles to compete against larger big-box stores such as Best Buy.
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