Roughly 1,100 RadioShack Stores to Close Due to Lower than Expected Earnings
It was announced on Tuesday that roughly 1,100 RadioShack stores will be closing due to a $400 million loss in 2013. RadioShack, one of Apple's many retail partners, could not adapt to the fast-changing consumer landscape. Competitor rivals including CompUSA, Circuit City and Tweeter Home Entertainment have already closed in the highly competitive electronic industry.
According to The Wall Street Journal
, shares of RadioShack have dropped 17% on Tuesday and lost $191.4 million in the last three months of the year, up from the $63.3 million they lost in the previous year. It was expected for RadioShack to hit $1.12 billion in sales for the December quarter but instead, earned $935.4 million totaling a 28% year-over drop.
Joe Magnacca, CEO of RadioShack, stated, “within five miles of my home, I have eight RadioShack locations” highlighting the swarming distribution of stores. Slow sales of tablets, accessories, and phones were reported by RadioShack, which typically accounts for half of the retail’s business. The company chain once accommodated “do-it-yourself” devotees and was slow to assume mainstream consumer electronics.
The company in recent years has tried offering tablets and smartphones at low prices including discounts for popular Apple iPhones. RadioShack, being Apple’s Retail Partner, was the nation’s second largest iPhone seller that physically carried the iPhones back in 2010. Unfortunately, even with limited-time discounts and aggressive price cuts, RadioShack seems to be unable to create revenue and in fact, may be the reason for the poor quarterly performance.
According to Joe Magnacca, “simply put, we exceeded our organization’s capabilities by trying to do too much too quickly.”
Source: The Wall Street Journal