RadioShack Will Close 1,100 Stores to Stem the Bleeding
RadioShack (NYSE:RSH) was all jokes during Super Bowl XLVIII, when it aired a commercial poking fun at its outdated image by bringing in a crowd of throwback characters from the 1980s, but it’s safe to say that no one was laughing on Tuesday. The electronics retailer released its earnings for the fourth quarter of 2013 and announced that it could close as many as 1,100 U.S. stores in the near future due to its losses totaling $400 million last year.
As a whole, RadioShack’s fourth-quarter results were significantly lower than analysts’ expectations. The company’s revenue was $935 million compared to the consensus estimate of $1.12 billion, and comparable-store sales were down 19 percent. Non-GAAP earnings per share was $1.29 (excluding a tax-adjusted $61.5 million impairment in onetime items), compared with the consensus estimate of 14 cents.
Though those figures helped lead RadioShack’s stock to fall 17 percent on Tuesday, sitting down 2.67 percent at $2.19 as of 2:45 p.m. Eastern on Wednesday, the biggest trigger for the stock plunge was the plan the company issued to dramatically cut back on its store count and close one out of every four stores that it operates, according to the Wall Street Journal. The publication reported Tuesday night that the company ended last year with less than 5 percent of the U.S. electronics business, and that figure is only expected to fall further as RadioShack continues locking up its stores.
RadioShack has suffered from the trend of consumers increasingly buying their electronics online rather than in stores, and as its Super Bowl ad highlighted, the outdated image of its locations also isn’t helping the company’s cause. As data from Kantar Retail suggest, 25 percent of all electronics, consumer products, appliances, and office equipment were bought online last year, the competition among brick-and-mortar retailers marketing electronics is tighter than ever, and RadioShack has shown an inability to gain an edge on its competitors.