Bingo!!!
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."
Expensive products, poor selection. That's Radio Shack. Who wants to make a special trip to Radio Shack for a plug in or a cord.
The place has changed. They now sell only a handful of radios (most made by Tecsun in China) and tons of Dish TV, cell phone services and well, that is about it.
Maybe time and bad marketing has caught up with Radio Shack the way it did with Lafayette Radio Electronics.
"it is replacing old, slower-moving merchandise like speaker wire "
Great! They'll get rid of the only stuff that brings me into the store. I guess it's off to Best Buy from now on.
Too bad, too. They were an easy place to buy small, common electronics components. I'll miss that. I won't miss most of Radio Shack, though.
By the way, price is a factor. A radio available online for $60 is $100 at Radio Shack.
Could it be that everything I ever purchased at Radio Shack broke after 3 or 4 days of use.>>>>>>>>>
I bought an answering machine there years ago, it was junk, it would have been better if it didn't work at all but it had INTERMITTENT failures, when I took it in to try to get something done it would work and the idiot clerk would treat me as if I was too dumb to know how to use it even though I ran my own electromechanical maintenance business and I am an ex-Navy electronics technician. Finally I took it back to the mall and waited until the store was full of people and I took the useless thing back and laid it on the counter. I announced in a very loud voice, "here, this piece of junk is the reason I will never shop here again, you can keep it". Every single customer turned and looked at me but nobody said a word. I then described my experience in detail so that everyone in the store heard me clearly and then I turned and slowly walked out. I never heard a peep from anybody.
"I remember when RS was the only electronics store."
Since I am a ham radio operator, from the 50s, I remember when Radio Shack got started. It was, and has always been a Mickey Mouse operation.
In the early days, I went to the local electronics wholesale distributor, the same that sold to business and radio repair people. I also bought from mail order companies like Allied, the parent company of Radio Shack.
Radio Shack filled a nich but has outlived it.
It's a shame. Truthfully, I don't shop there cause of the rigamaro you have to go through when you buy something there.
Bingo!!!
"Expensive products, poor selection. That's Radio Shack. Who wants to make a special trip to Radio Shack for a plug in or a cord."
Well, I do. You have a point there, but I'm not surrounded by electronic distributors. RS is my only choice for a lot of small items.
I still have RS scanners and accessories over 20 years old that work perfectly. I'm sure you're right about the newer stuff, though.
It's getting so you just about have to go to eBay for many specialty electronic things. No local stores carry them anymore. I don't really mind, as my experiences with hundreds of eBay purchases have been very good, but it changes the consumer dynamic. Lately, a flood of electronic products are being offered directly from Hong Kong at ridiculously low prices. For example, I got a stereo headset with noise-reducing mic for $1.98, compared to $30+ at RS or BestBuy. No, I don't expect it to be working in 20 years, but it works for now.
They stopped it, I think - but too late. Turned off a lot of potential shoppers. Then factor in high(er) pricing and low(er) quality and you have a recipe for doom.
I still visit RS if I need a wacky micro switch or a capacitor or some solder. And that's only because Lowes or Home Depot offers up a 2 mile walk through the aisles just to get to the proper dept, then once you find the proper shelf in the proper dept, you have to find the proper tray and then the proper cubby hole in that tray, which is usually empty or has a backorder card in it.
A $3 sale shouldn't take an hour and a half or worse, 3 days.
Grainger is even easier!
>>>If you don't sell stuff people want you can't stay in business........>>>
Exactly.
Good. I'm still angry at them for putting Lafayette Electronics out of business here. I suppose when you sell expensive junk you have few return customers.
>>> Everything there is way overpriced. They're good for wires or cables when in a crunch, but that's about it.>?>>
LOL! I just posted the same statement (virtually). Guess it isn't just me.
"I quit going in Radio Shack years ago, cause even just to make a simple purchase required that you give them your entire life history."
Wow...I now remember that. It really irritated me.
One time I was in a hurry...ran into a RS store to buy
something like a resistor, and was subjected to a list of questions.
I blew a fuse !
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....
"True, but there may be a means for Radio Shack to reinvent itself into the component supplier of choice for industrial tech buyers like me."
It would be good if that were the case. Ther are times when I need various cable connectors and such as well but have to wait for them on order.
Yes...the hard to find stuff. Where else can you buy those types of items? On the cordless phone batteries, I know they probably get a 400% or better mark up, but what choice is there? I needed an AC power inverter while on the road one time....stopped at Radio Shack and it was $149. No thanks. I then got an idea and stopped at a boating supply type store, and bought a higher wattage inverter for $64. Like many here, I can't believe it has taken this long for problems to surface.
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