RadioShack Joe Magnacca has pulled every rabbit out of the retailer’s tattered hat. The embattled electronics brand has shuffled executives, changed its logo, redesigned its stores, and even had one of the most popular Super Bowl commercials.
But to no avail. RadioShack has continued its downward spiral and has announced with its fourth quarter earnings that it will close 1,100 of its retail locations after reporting dismal fourth-quarter numbers.
Sales during the prime holiday-season were $935.4 million, down from the $1.17 billion made in the same quarter a year earlier and significantly lower than the $1.12 billion analysts, on average, were looking for, Reuters reports.
Stores that had been open for at least a year saw sales fall 19 percent. In 2012’s fourth quarter, the company’s net loss had been $63.3 million. This time, it was $191.4 million. The news inspired the company’s stock to drop almost 24 percent.[more]
The beleaguered consumer electronics retailer’s plan for the future remains to stick fast to five tenets: reposition the brand, revamp the product assortment, reinvigorate the stores, improve operational efficiency and be financially flexible. Magnacca told analysts that he expects the turnaround to take a few quarters to happen and the fourth-quarter numbers were because of “poor shopper traffic, intense discounting by rivals, tepid mobile phone demand and operational problems,” Reuters notes.
Magnacca added that RadioShack’s new concept stores are doing well and there has been a lot of positive response to its “Do It Together” campaign that kicked off during the Super Bowl last month. Analysts, however, aren’t necessarily seeing things the same way.
“Mr. Magnacca and the new team deserve a lot of credit for the changes they are making, but it seems harder and harder for them to overcome the more significant obstacles,” Janney Capital Markets analyst David Strasser told Reuters. He also noted that RadioShack’s fourth-quarter report “reads somewhat like the Circuit City press releases of 2008, before they filed (for bankruptcy) in November 2008.”
— RadioShack (@RadioShack) March 4, 2014
Before the year-end earnings report came out Tuesday, Magnacca sent a letter to the brand’s customers that included a $10 coupon, the Dallas Morning News reports. “In my year at the company, we have put our complete focus on you and what we can do to better serve your needs. We thank you for shopping with us recently,” he wrote. “Consider this offer an invitation to visit RadioShack again soon.”
Just hopefully not at a liquidation sale.