Jennifer Sheehan/The Morning Call—Electronics chain RadioShack Corp. announced Tuesday that it plans to close up to 1,100 stores across the country thanks to plunging sales.
The planned closures would leave the Fort Worth, Texas company with more than 4,000 stores, including more than 900 dealer franchise locations, its chief executive officer said.
According to the company’s website, there are 18 RadioShack locations in the Lehigh Valley area, including those at the Lehigh Valley, Palmer Park and Phillipsburg malls.
Calls to RadioShack were not returned. However, the company issued the following email:
“We are not releasing a store closing list at this time. However, RadioShack will maintain market coverage as part of this plan, with more than 4,000 U.S. stores in the RadioShack footprint. We will have information to share in the future.”
Retail expert and consultant Jeff Green said he would expect 4 or 5 Valley-area stores to close.
Green, who’s president and CEO of Phoenix-based Jeff Green Partners, said like Kmart and Sears, RadioShack is fighting a tired image.
“In the consumer’s mind, there’s nothing they are known for,” Green said. “It’s how they are perceived in the marketplace.”
In a Super Bowl ad this year, the company unveiled a new campaign. “Out With the Old, In With The New Radio Shack,” poked fun at its image as a company stuck in the ’80s. The commercial featured ’80s favorites like Hulk Hogan, Teen Wolf, the California Raisins and Alf.
“I guess the question is, are they shrinking it to reposition it,” Green said. “That’s not necessarily a bad strategy. They are going to need to put capital investment into their stores. With fewer stores, it’s less capital investment and they won’t be saddled with money-losing stores.
And RadioShack has faced increasingly stiff competition from national retailers like h.h. Gregg, Best Buy, Walmart, Target and Amazon.
Green said RadioShack’s strip mall locations are doing a bit better because those sites are convenient for shoppers looking for things like cords, cables, batteries and adapters. (Many of the Valley’s RadioShack locations are in strip malls.)
But those aren’t the big ticket items that make a difference on a company’s bottom line. And analysts say RadioShack has not done enough to transform itself into a destination for mobile phone shoppers, nor has it become hip enough to woo younger shoppers.
The company’s net loss widened to $191.4 million, or $1.90 a share, in the fourth quarter, from $63.3 million, or 63 cents, a year earlier.
Sales fell to $935.4 million in the quarter covering the all-important holiday season, from $1.17 billion in the year-ago period. Analysts, on average, looked for sales of $1.12 billion, according to Thomson Reuters I/B/E/S.
CEO Joe Magnacca, who took the helm in February 2013, has said he expected the turnaround to take several quarters.
RadioShack has been working with bankers from Peter J. Solomon Co. to boost liquidity and with AlixPartners on improving operations.
The retailer, which secured new loans heading into the holidays, ended the fourth quarter with total liquidity of $554.3 million, including $179.8 million in cash and cash equivalents and $374.5 million in available credit.
At Dec. 31, its debt totaled $614 million and matures between 2018 and 2019.
RadioShack shares were down almost 14 percent in mid-day trading.