RadioShack to shut up to 700 stores
 

RadioShack to shut up to 700 stores as earnings tumble By Angela Moore, MarketWatch
Last Update: 10:25 AM ET Feb 17, 2006

NEW YORK (MarketWatch) -- RadioShack Corp. on Friday posted a 62% drop in fourth-quarter net income, and announced a sweeping restructuring plan that could include up to 700 store closings.

The dismal quarter and restructuring comes in the wake of the company's chief executive admitting he lied on his resume about his academic record.

Shares of the struggling home-electronics retailer (RSH) were down nearly 6% at $19.53 in early trading on the New York Stock Exchange, after slipping nearly 10% in pre-market trading.

Net income fell to $49.5 million, or 36 cents a share, from $130.9 million, or 81 cents a share, in the year-ago period. Before the effect of an accounting change, earnings were 38 cents for the latest quarter.

RadioShack's quarterly sales at stores open at least one year rose 4%, while total sales in the three months moved up 5% to $1.67 billion.

Analysts, on average, had expected the company to post a profit of 67 cents a share, on revenue of $1.67 billion, according to estimates compiled by Thomson First Call.

The Forth Worth, Texas-based company told investors in its presentation that strong sales in items like digital cameras, satellite radios and portable DVD players were not enough to offset weakness in wireless and high-margin items like batteries and radio-controlled toys.

Poor results, significant write-down

David Edmondson, president and chief executive, called the quarterly results "poor."

Earlier this week, CEO Edmondson disclosed that he had lied on his resume about his academic record. The company's investigating the matter. On Friday's investor call, Edmondson apologized for any embarrassment he brought to the company.

RadioShack's quarterly performance "caused us to take a much deeper look at the state of our business and resulted in the launch of a turnaround plan" he said in a statement, singling out a "significant" inventory write-down.

"The stock might have limited downside from here," Deutsche Bank analyst Mike Baker wrote in a note to clients. "However, we believe earnings could continue to fall due to collapsing margins."

As part of the restructuring, RadioShack will replace old, slower-moving merchandise with new, faster- moving merchandise within higher-growth categories.

Along these lines, it will close 400 to 700 company-operated stores and expand its kiosk business.

In addition, RadioShack intends to close distribution centers in Charleston, S.C., and Southhaven, Miss.

The impact to the company's income statement is anticipated to be neutral, but the cash implications are likely to be positive due primarily to the release of a safety stock of inventory.

Management also set an estimated free-cash-flow target of $50 million to $100 million for fiscal 2006.

"RadioShack failed to achieve its financial objectives in 2005," Edmondson said. "We implemented several key changes including executive management, advertising, store operations, merchandise assortment, long-term wireless agreements, and more.

"We believe that the company's strategy is sound. But we must move at a much faster pace with a greater sense of urgency, and that is what necessitates our turnaround plan."

Earlier this week, CEO Edmondson disclosed that he had lied on his resume about his academic record. The company's investigating the matter. On Friday's investor call, Edmondson apologized for any embarrassment he brought to the company.

No surprise. If most people want something electronic related, they go to Best Buy now. I haven't been in a Radio Shack in a long while.

It's still a good place to find electronic components that the giant consumer electronics stores don't have. Their prices suck however.

The last time I went into a Radio Shack was when they had a $5 coupon with no minimum...

www.monoprice.com has lots of good stuff that is much cheaper than Radio Shack. I know they have great deals on cables, but I don't know if they carry everything the Shack did.

What, those lame commercials didn't work? you know, the ones where different people talk into the camera and tell us what they want?

Oh man, this could be horrible. When I need some sort of adaptor or cable, and I need it now Radio Shack's always been the place to go.

Oh my God, this is terrible!

Where am I going to go to buy substandard, over-priced stereo equipment now?

Here in midtown Manhattan, there are <i>three</i> Radio Shack locations within a five-minute walk of my front door - that's at least two too many.

yeah they usck. I have not too far from my house and it was supposed to be a white castle but became a radio shack. SO it is a white castle building with electronics inside.

Bought titanium headphones back in December and thought they were pretty decent that a week later I looked and they only had one left so I bought another. They were 50% off. But other than that its been years since I bought anything there.

Does anyone remeber that BIG flashlight they gave you free if you bought radio shack batteries and then when you got home and put the batteries in it didnt work beacause the batteries were dead? That might have been 15 or 20 years ago.

Radio Shack: You've got questions, we've got blank stares.

I just bought a 12' DVI single link cable for $12.99 priced down from $129. Radio Shack brand. Not bad. Considering the cheapest one I could find elsewhere was $79. And Monster. Bleh.

fixed ;)

I'm sorry, but I stopped caring about Radio Shit when they stopped carrying 1N34A diodes...

Radio Shack ceased being Radio Shack a few years ago.

No more woofers. No more tweeters. No more crossover components. Just someone trying to sell you a cellular plan each time you walk in the door.

...or a Satellite Dish system. I still use them for those weird little electronic components though.

They used to sell high-quality stuff back in the 70's, but gradually they began selling crappier and crappier stuff until they hit rock bottom. I haven't even been in one in about 10 years, but even back then the stuff was dollar-store quality and overpriced. There's one near me that I never see anyone in, I don't know how they have stayed in business this long. I guess cell phones and satellite dishes must have been keeping them afloat.

Yeah, I'll go in there if I'm looking for something obscure like a CATV attenuator, but otherwise...why?

Unfortunately, I can't stop in at monoprice over lunchtime.

rotfl


much to my dismay, I found a RS today that was about 10 minutes closer than the one on their site directed me to. Too little too late. Especially since I won't need to go back again for another 6-8 months.