RadioShack to Close 1,100 Stores as Sales Slump
- "The retailer has been retooling stores in response to competition from online rivals such as Amazon.com Inc. To help speed the comeback, RadioShack said today it will shut as many as 1,100 underperforming stores, leaving about 4,000 U.S. locations."
TAKEAWAY FROM HEDGEYE'S BRIAN MCGOUGH:
Despite a clever and much-discussed Super Bowl '80s flashback advertising blitz (see video: "The '80s called; they want their store back.") the reality here is that RadioShack probably does not need to close stores.
It needs to close RadioShack altogether.
The store banner is hardly an asset, nor is the fact that it is the destination for replacement transistors, extension cords, cheap electronic toys, and mobile phones (and even that is underperforming). The greatest asset, in our opinion, is actually the 5,000+ US store locations.
Think about it.
If you wanted to build a small format retail concept in any other category -- apparel, sporting goods, or heck, even e-tail showrooms -- it would take at least a decade to build up that kind of scale.
If current management (who is quite good -- especially for Radio Shack) can pull off this turnaround, then we'll give 'em all the credit in the world. But we think a better answer lies in a different strategic direction.
