Posted on 02/17/2006 12:06:55 PM PST by iPod Shuffle
RadioShack to close up to 700 stores
Fri Feb 17, 2006 1:16 PM ET
By Nicole Maestri
NEW YORK (Reuters) - RadioShack Corp. (RSH.N: Quote, Profile, Research), whose chief executive has admitted to lying on his resume, on Friday said quarterly profit fell 62 percent after a switch in wireless providers led to an inventory write-down, sending its shares to a nearly three-year low.
The consumer electronics retailer, which said it was hiring legal counsel to investigate the admission by CEO David Edmondson, also announced a new turnaround plan that includes closing 400 to 700 company-operated stores and liquidating slow-moving inventory.
The company said it was "unwise" to issue earnings forecasts for 2006 given the uncertainty of the turnaround plan, which could cost up to $100 million.
"We have been very cautious on (RadioShack's) ability to execute the wireless transition smoothly and are skeptical on the just-announced turnaround," Lehman Bros. analyst Alan Rifkin said in a note. "We would not be owners of (the) shares at this time."
RadioShack shares were down $1.61, or 7.8 percent, at $19.14 in afternoon New York Stock Exchange trading after touching as low as $19.02.
FALLING EARNINGS
Fourth-quarter earnings fell to $49.5 million, or 36 cents per share, from $130.9 million, or 81 cents per share, a year earlier.
According to Reuters Estimates, excluding 22 cents per share for the inventory write-down and a 2-cent charge for an accounting change, profit would have been 60 cents, which compares with the analysts' average forecast of 66 cents.
Sales rose 5 percent to $1.67 billion, compared with analysts' target of $1.62 billion.
The results come two days after Edmondson admitted that he lied about his academic record on his resume and on the company's Web site. The discrepancy was first reported earlier this week by the Fort Worth Star-Telegram.
At an investor conference, Edmondson began by apologizing for any embarrassment the situation caused and said the issue was now in the hands of the board.
As for the quarterly results, Edmondson said sales were "good" in low-margin nonwireless categories like MP3 players, but were weak in high-margin categories, like batteries. Sales of wireless products, a key profit driver, were below targets.
Last year, RadioShack said it would switch phone carrier partners to try to revive its wireless sales. It agreed to sell Cingular Wireless phones and cut ties with long-time ally Verizon Wireless. It also signed a new 11-year deal with Sprint Nextel Corp. (S.N: Quote, Profile, Research).
But the transition, which took place at the end of the year, turned out to be more difficult than expected.
On Friday, RadioShack said it took an inventory write-down of $62 million in the quarter, and it is replacing old, slower-moving merchandise like speaker wire and outdoor antennas with new, faster-moving items
"Our business model for many years has been based on high- margin, slow-moving products," Edmondson said during an investor presentation. "These products are taking up valuable space in the store that can be much more efficiently utilized."
RadioShack said it would liquidate some products, take "aggressive" mark-downs on others and let some stay on store shelves until they sell out. It will continue to sell some of the products on its Web site, though not in the stores.
The company also expects to add about 200 kiosks in 2006, relocate some stores to better sites, and close two distribution centers.
RadioShack, which has 7,000 company-owned and dealer stores, estimated it would incur costs of $55 million to $100 million on the inventory write-downs and store closures in 2006, although it may take some of the costs in 2007, depending on when it closes the stores.
"While the execution of the turnaround plan will trigger the recognition of significant costs," Edmondson said, "we are confident that the steps we are taking will put RadioShack back on the track to sustained profitable growth."
I bet they've got a file on every man, woman and child in this country of ours. That's an asset they could sell to the Klintoon Mafia to go with their FBI files.
Too bad they can't replace the hired help with illegals-- (They've probably decided to do that when they reopen a few stores.) (heavy and annoyed sarcasm.)
They'd probably have better lucky stocking the parts for a shoe bomb and marketing to Algerians...
"I never went to a Radio Shack where the salesperson knew anything or the item was in stock."
It wasn't that way 20 years ago. It used to be you could ask for a rheostat, a power inverter, or an IC555 and they understood you. Today they are totally clueless.
A gent from Comcast knocked on my back door this morning. He said if I was a man who actually lives up the street in the next block. I told him the fellow he named was in the next block, and pointed the direction. So what did he do? He leaves my back door and knocks on my side door. I open the side door and sez "I told you the next block, not next door." He turns away with a puzzled look and walks back to his truck and drives away.
>>>Why is everyone in here always so happy when a business goes out of business? Radio Shack carries parts you can't get anywhere else....>>>
Noone is 'HAPPY' when a business goes out of business, we are merely expressing our dislike of THIS business.
Seems even Wal mart, with all its warts, often has folks who are more knowledgeable.
Disposable society BUMP
There are lots of places to get parts, its just that you can't go there and see the stuff and take it home with you. For example...
"Who is really 100% truthful on their resume?"
Many companies are now using head-hunter firms to vet resumes of applicants for even relatively low-level jobs. I know that some outrageous BS artists still get hired, but in the Information Age outright credential fraud is becoming rarer.
that's all I have used them for is wires or cabling, but hell I can get that stuff cheaper now at other places anyway.
(It helped that Mom's brother was a EE and could make it work.)
In this these days of flat screens, you would not believe the curve on that mid-to-late 1960s tube.
Several years ago I went to RS to purchase a cable adapter plug. It was the only place in the area that carried the odd item. It cost a couple of dollars, that was the only thing I was buying, and I had the cash in my hand.
Then came the demands for the name, address, blah blah blah. I stated, "I am paying with cash." (Of course they knew this, as it was not relevant to their nosy questions).
The pimple-faced clerk mumbled something about needing the info for their mailing list. I stated pleasantly but firmly that the cash was legal tender and I was not interested in their mailing list. At this point the jerk could have had bolts popping out of his neck. He started spouting off that HE would get in trouble with his boss if he didn't enter the info in the computer with every sale. IOW his bad attitude was all my fault.
Seeing how steamed this punk became when a customer refused to bow to his demands, I continued to stand politely at the counter with the cash in hand, fully expecting to complete the transaction. He rang it up, snarling at me that I was going to cause him grief with his boss. I could have suggested that he seek employment elsewhere, but he was probably working at the only place that would hire such an insolent loser. Figured that he was future Radio Shack management material.
Never stepped foot in there again. I made sure to tell neighbors and friends about the experience.
I Am!!!
Just don't ask me what my Democratic Underground screen name I use to rile up the moonbats over there :)
LOL - I loved Heathkits. I built a whole bunch of things from their kits.
Haha! Forgot about that. It was ok when they would send a free catalog. I think they collected tons of consumer data, but never actually did anything with it (except maybe sell it).
Rat Shack is still around? I wonder if there's one in my city? I wonder if I care enough to look.
I think they finally realized how much money that idiotic policy was costing them.
That always bothered me as well. I pay cash for small purchases. When they start asking for name and address I asked them what part of cash sell do you not understand?
They look surprised that I would not willingly answer their questions.
I finally just quit going to Radio Shacks.
Same. I had a Color Tandy back in 1979. It was really spiffy, with a tape recorder for a storage device.
They are still the only local store around which sells things like power supplies.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.