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."
Lafayette Electronics!!!!! Man, I forgot all about them. You're right, they were great!
How'd you know I was older than dirt? :-)
I'll tell you guys what is killed Radio Shack.
You can find just about ANYTHING for a computer at sites like:
http://www.newegg.com/
If you can't get it there, you can get it other places and any of them will probably be cheaper.
It sounds like they are heading the other way - getting rid of the specialty stuff in favor of more junk that will move quickly.
Aside from him lying about his qualifications, why would the board have thought that a theology degree (which apparently doens't exist) would qualify him to run a retail chain?
I love RS. It's great for all kinds of neat music stuff that you can't always find anywhere else--mic stands, small mixers, signal splitters, cables, etc. You MIGHT be able to find some of this stuff at Best Buy, but not always and you'll not always find someone to help you. My experience at RS is that although they may try to sell you a cell phone, they'll treat you very well even if you're just buying batteries.
I was once trying to buy a short wave radio. I bought one but wasn't quite happy. The salesman let me take home another radio--without me even paying for it--just to compare it with the one I'd already bought. He actually trusted me to come back and settle up.
Oh well...Too bad.
The kid was a real piece of work, but I didn't have any trouble believing his claim. But that was just it... if the management was that obnoxious, he could have found another job. But no, he figured he could bully the customers with a guilt trip. Thus, it seemed to me that he accurately reflected the arrogance of RS. He was either going to be fired for taking policies to their logical idiotic conclusions, or he was destined for management. :-)
It looks like he snuck-in under the radar before being promoted from within:
Edmondson took an unusual route to the executive suite.He left Colorado in the summer of 1980, and started a church in a suburb of Omaha, Neb. He returned to Colorado a few years later to start another church before transitioning into a full-time business career. Eventually he landed at Advo, a database and direct marketing firm that worked with RadioShack, then known as Tandy Corp.
Roberts, then president of RadioShack, was impressed after Edmondson sent him a letter with ideas for the RadioShack business. As Roberts and Edmondson both tell the story, Edmondson wasn't looking for a job at the time, but Roberts was able to lure him to RadioShack as a vice president of marketing.
By the end of 2000, Edmondson had been promoted to president of RadioShack, where he was known for his creative ideas, strong negotiating skills and a passion for flowcharts and graphs illustrating the chain's strengths and weaknesses.
As the heir apparent to the CEO post, Edmondson rounded out his schooling with Harvard Business School's Advanced Management Program, an executive education program geared toward corporate managers. Program director Kathryn Venne confirmed that Edmondson completed the nine-week session in the fall of 2002.
Venne said that candidates are asked to list their academic history on their applications. But because there are no educational prerequisites to attend the program, she said, the school "wouldn't have followed up" on the information.
After his time at Harvard, Edmondson began to play a bigger role in corporate decisionmaking. He typically addressed Wall Street during the company's quarterly conference calls, offering updates on RadioShack's efforts to cut costs and become more efficient.
On Jan. 13, 2005, Roberts announced that he would step down as CEO and hand the job to Edmondson, saying, "Dave is ready." Edmondson officially replaced him May 19 at the company's annual stockholders meeting.
(Excerpt from RadioShack CEO's résumé in question)
Did they talk to the balding white guy who smells like soldering flux? No? There ya go.
Sudden nerd unemployment crisis!
I never give it to 'em. It's funny to watch what those kids do when they ask for your phone and you say "Why do you need that?" and they say "just for our sales info", and then I say "you don't need that", and they leave me alone... Try it, it's a kick.
Thye do come in handy for the odd emergency purchase, I must admit. I had to make a sudden trip out of town a few months back and needed a good Field Strength Meter -which they did not stock so I wound up purchasing an RF Scanner which they happened to have on sale and which worked almost as well for My purposes. They also were open late as always so they really saved My arse -thanks, mates!
Incidentally, anyone know where I can get a cheap FSM these days so I don't have to actually build one?
They don't have much for radio or robotics experimenters anymore. Without that, they have no reason to exist.
Then they started selling cell phones.
The last two times I went to Radio Shack they had a very small selection of electronics parts, not half of what I needed.
And I got to stand in line for 30 minutes while the sole clerk tried to fix some ladies' cell phone problem.
Farewell, Radio Shack.
I have found a real electronics store, they have stuff even the Lab Geeks don't know about.
If I want novelty electronic junk that breaks in 5 days I can get it cheaper at Walmart. And I won't have to wait in line for 30 minutes unless it's the week before Christmas.
If it had not been for the Radio Shack in Riyadh, our military command and control would not have worked. When we arrived in country, many of our communication systems were not working. Because of the local Radio Shack, we were able to obtain the vital parts that made it happen.
This is one of the many lessons that the American military learned, and if it had not been for Radio Shack, things could be different today.
Radio Shack specialized in electronic parts, and even today, they are my first choice before the Internet.
Why? Because sometimes, I need to hold an item in my hand to insure that it is what I had in mind!
Second hand resellers have NEVER had the customers needs in mind!
Radio Shack needs to remember who their real customers are. Could it be that no-one builds stuff anymore??
Wonder what they'd do if I took in my EL84 (Fisher X-101 amplifier) tubes for an exchange on their "Lifetime Guarantee"???
The Amp still works great and I run the TV Audio through it sometimes.
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