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RadioShack Is Dead Money, Here's Why

April 28, 2014 | About:
Rustic Nomad

Rustic Nomad

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It has been a lackluster year for RadioShack (RSH) with the stock dipping 33% in the last one year. The retailer of consumer electronics goods had taken various strategic initiatives to turnaround things, but it could not deliver. RadioShack has recently announced to shut down 1,100 underperforming stores. However, the company has revamped its top management in a bid to turn around, but there seems to be no relief for the investor in the short-term.

Nevertheless, RadioShack is taking various measures so as to compete with online retailers such as Amazon (AMZN) and bigger peers such as Best Buy (BBY).

In Troubled Waters

RadioShack has been wading through troubled waters for quite some time. It has seen major setbacks in various areas to strengthen its position to deliver better financial results. The company has assigned three new executives with over 60 years of combined experience. As a part of its turnaround strategy, management has come up with what it calls the “five pillars” plan.

Although its recently declared quarterly results do not illustrate any progress based on these pillars, yet the management is investing heavily in these pillars and remains very positive about it. It five pillars includes, repositioning its brand, revamping product assortment, reinvigorating store experience, improving operational efficiency, and improving its efforts for financial flexibility. Let us see one by one how RadioShack plans to execute on this five-pronged strategy.

Turnaround Initiatives

RadioShack, with its first pillar, would like to reposition its brand in the mind of customers and end users. And as it moves forward, it has launched an award winning commercial that will certainly enhance consumer engagement and coverage. Also, it launched its new brand positioning statement “Can Be Done, When We Do It Together.” Furthermore, the company is counting on the technical knowledge of its store associates to set itself apart from its peers.

Its second pillar throws light on revamping the product assortment; a critical element as far as online business is concerned. Hence, the company is doing enough to find out new trends as soon as possible and is determined to support technological innovation that will predominantly help the company to set efficient and effective product assortments.

Moreover, RadioShack has identified its business into tow platforms such as mobility and retail. With mobility platforms that consists of mobile phones, tablets, and other related accessories, the company aims at superior service and accessibility to these happening gadgets. Also, RadioShack is entering into prepaid and postpaid contracts with various operators in order to bring new choices to its stores.

RadioShack’s third strategic pillar focuses on reviving the store experience. The company has come up with the new store concept expressively advancement in technology retailing that reenergizes its stores. These stores will be well lit, intricately designed with clean lines and modern materials that highlight the products it sells. The company is determined to differentiate itself from its peers through this new store experience. Also, it has live devices of various products in its stores that the customer can operate and see before buying.

The fourth pillar focuses on improving the operational efficiency. As mentioned above, it has recently announced to close down approximately 1,100 underperforming store, a strategic move to increase operational efficiency. RadioShack, however, has over 4,000 stores in the United States after the planned closure that could witnessed its turnaround going forward.

Conclusion

RadioShack’s initiatives look promising on paper, but it faces real and potent challenges from new-age retailers like Amazon and a turnaround story like Best Buy. The future doesn’t look promising at all, with analysts projecting a 148.8% annual decline in RadioShack’s earnings over the next five years, making it look like a dead money investment.


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Comments

captcorajus
Captcorajus - 2 months ago

"You've got questions, we've got answers." When RS moved away from this model, that's when the down slide began. When Len Roberts was CEO the stock split and was as high as $70 a share in the 90s.

Each decade, RS needs to revamp its model to take advantage of customer confusion with the latest technologies. In the 70s it was CBs, in the 80s it was computers, in the 90s it was cell phones. In the 2000s RS clung to its cell phone market, and failed to get a foot hold in the emerging digital market, even though with its neighborhood locations it was ideally positioned to do so.

Now, customers tend to avoid the place as employees tend to badger them about their wireless service. Even worse, employee training is atrocious. The instore experience has gotten progressively worse and worse. The career life of a store manager is painfully finite, and RS burns through its customer level employees quickly, thus even though it is a neighborhood store, so locals don't get that familiarity that they are traditionally use to.

Furthermore, RS has gone to the outside for its upper management, instead of promoting from within, using the huge amount of instore experience at its desposal. A total waste.

Unless RS figures this out, and soon, the company is set to fail.

captcorajus
Captcorajus - 2 months ago

"You've got questions, we've got answers." When RS moved away from this model, that's when the down slide began. When Len Roberts was CEO the stock split and was as high as $70 a share in the 90s.

Each decade, RS needs to revamp its model to take advantage of customer confusion with the latest technologies. In the 70s it was CBs, in the 80s it was computers, in the 90s it was cell phones. In the 2000s RS clung to its cell phone market, and failed to get a foot hold in the emerging digital market, even though with its neighborhood locations it was ideally positioned to do so.

Now, customers tend to avoid the place as employees tend to badger them about their wireless service. Even worse, employee training is atrocious. The instore experience has gotten progressively worse and worse. The career life of a store manager is painfully finite, and RS burns through its customer level employees quickly, thus even though it is a neighborhood store, locals don't get that familiarity that they are traditionally use to.

Furthermore, RS has gone to the outside for its upper management, instead of promoting from within, using the huge amount of instore experience at its desposal. A total waste.

Unless RS figures this out, and soon, the company is set to fail.

chriselp
Chriselp - 2 months ago

I've gone to 3 different stores over the past 2 weeks and at no time was I coerced to buy a mobile phone. When I did purchase, nobody tried to sell me a warranty. I think the staff at all the stores do an excellent job and were fairly knowledgeable with all the inventory they had. Every receipt I got, I filled out the survey and gave them high marks. The associates deserved that.

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