Why does RadioShack still exist?

The chain says that sales are falling and that profit this year will be lower than in 2011.

By Kim Peterson Apr 24, 2012 1:55PM
Shares of RadioShack (RSH) were getting pummeled Tuesday, falling more than 10% to $5.30, after the electronics retailer said it lost money in the first quarter. The stock sank to an all-time low earlier in the day.

RadioShack suffers from the same problem as Best Buy (BBY). The stores have essentially become showrooms for people who want to check out the products -- and then buy them from Amazon (AMZN) and other online retailers.

Post continues below.
RadioShack's sales and earnings came in below analyst expectations, which triggered the sell-off on Wall Street. The company reported $1.01 billion in revenue, lower than the $1.06 estimated by analysts. The company lost $8 million, or 8 cents a share, way down from the $35.1 million profit it made a year earlier. Analysts were expecting a profit of 4 cents a share.

Sales at stores open for at least a year fell 4.2%.

There's another problem for RadioShack. People aren't buying as many computers and cameras, which bring higher margins, The Associated Press reported. Instead, they're buying more tablets and smartphones, which don't contribute as much to the bottom line.

It all adds up to a bleak picture for RadioShack. That the company has actually been able to make it to this point is shocking. I can't see many bright spots in this chain's future.

The few times I've been into RadioShack lately, I've noticed some interesting things. First, the store is usually empty. Second, the salespeople are a little too attentive, descending on me the minute I walk in. Third, a huge chunk of each store is devoted to mobile phones, leaving little space for much else. But the stores generally seem to be in strip malls and other low-rent areas, which help keep the company's costs down.

Can this chain continue to exist?

Moody's reduced its ratings on RadioShack to junk status after the report. The company said 2012 will be "another challenging transition year" and said its annual profit would be less than the $72.2 million it reported last year.

Analysts don't expect the stock to go very far.

"This is not a good quarter, and (it) highlights the increasingly difficult competitive position that RadioShack is in today," David Strasser of Janney Capital Markets wrote to clients, according to AP.

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235Comments
Apr 24, 2012 6:33PM
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I worked as a Radio Shack manager for 15 years.  They (the corporate higher-ups) have lost sight of what customer's really want.  After Len Roberts left as CEO, the company began a long down-hill slide, punctuated by some real internal problems.  Radio Shack was once and industry leader that set trends, rather than the let's do it like everybody else.  They have really lost the idea of who they really are.  Changing their name to just "The Shack" was a bonehead idea.  Making employees dress in t-shirts and wearing lanyard name tags is what everyone else in the industry does. Being different set us apart.   I continue to be amused at the problems corporate sends   down into the field and at store level.  Managers don't run their stores, they merely have to report numbers and key merchandise sales to their district managers two and three times a day. Instead of sales and focusing on customer's needs it's charts and numbers to be reported to the district manager, regional manager and divisional V.P.  Top heavy in middle managers and lots of number reporting.  Move over Circut City, here comes The Shack.  Can you say crash and burn?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apr 25, 2012 3:04AM
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There has been a vacuum for decades since Heathkits disappeared. To be able to once again learn the basics from building your own equipment would help spur more creativity among our nation. I believe that many of the Silicon Valley pioneers started out this way and built their hobbies into a high tech industry.

Perhaps RS could re-invent itself into a modern DIY kit building store with higher end passive components (resistors, capacitors, diodes) not the current floor sweepings from China. If they would stock Japanese made items from Panasonic and other quality parts they would survive and become more important in the marketplace.
Apr 25, 2012 8:02AM
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If Best Buy and Radio Shack go out of business...so will the online retailer. I am sick and tired of people clamoring about pricing being outrageous.  Go and open a store..pay rent, utilities, hire local people, payroll taxes, training of new employees, pay for stock, shipping of stock, surcharges for shipping of stock, pay duty for out of U.S. products that we don't make any more, display your inventory...and in the same breath tell me how much it costs.  The online person..builds a website (no employees), pays no merchandising costs whatsoever, pays a temporary agency for workers to ship product...your entire inventory is really someone else's inventory (probably located in a foreign land).  You mark your inventory at 10% above your cost..and all you are really doing is pushing paper.  You have no workers and do relatively little to support your local economy..no full-time workers..very little payroll taxes..no state sales taxes.  Once America fully embraces this system....please everyone move to China/ Mexico/ South America because there will no literally no infrastructure left in this country.
Apr 24, 2012 4:38PM
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When I go to the Shack for a cable and find it is priced two to three times what it is elsewhere why wouldn't I take my money to their competition?  Prices too high, clueless employees, lack of products, all good reasons they are failing.
Apr 24, 2012 4:10PM
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Radio Shack used to be great about keeping good quality electronic components on hand at reasonable prices.  Nowadays, their component drawers seem to be leaving, replaced by cell phone stands.  They should take a lesson from Harley Davidson, you don't jetison folks that have been your customers for decades to attract new ones.
Apr 24, 2012 6:13PM
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Back around 2002, when I was managing a Radio Shack, some pinhead in Ft. Worth [company hq] decided that Radio Shack would no longer be a place where people bought major electronics items, but instead, would buy the accessories for those major items.  There are about a thousand reasons why this was folly, but no one of importance seemed to see any of them. [The 1st, and probably most important reason is that Radio Shack overcharges greatly for their accessories, and almost never discounts them.] 

In the 6 months after I was released from the surly bonds of employment there, nearly 3/4 of the managers in my district were also fired, and it was mostly so that RS could save on salaries - eliminating senior [and I mean in tenure, not age] staff was a great way to do it, or so they thought. These days, getting intelligent help from a Radio Shack employee is one akin to the search attributed to Diogenes. 

During my last year at RS, the stock went from $72 to $25, sent tumbling by the then president's selling of a huge block of stock, just before his announcement of leaving the company. 

It was all downhill from there. Len Roberts had us all believing that an RS manager could, and moreover, would, become a millionaire [at least on paper, in stock value] after 5 years in the position.  What fools we all were.

 
Apr 25, 2012 12:21PM
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Where else are you going to get that 1 micro farad capacitor at 8:00 pm.

Apr 24, 2012 4:40PM
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I'll echo what most are saying.  We (the customers) haven't changed.  The store changed.  I used to think of Radio Shack as a consumer store for electronic components.  The last three time I went there, they didn't have the components I needed, although they were fairly common.  So I ordered them online from Mouser.  Now, I skip the anguish of going to RS and just order from Mouser in the first place.

If I want a cell phone, I'll go to Verizon or AT&T.  Radio Shack isn't in the top five destinations if I'm looking for a phone, computer, stereo, etc.  I can get the same quality stuff at Walmart.   So if they don't stock electronic components, I have no need for them.

They did it to themselves.

Apr 24, 2012 9:14PM
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This is very frustrating.  Radio Shack seems to be floundering, looking for a reason to exist.  For one, I never buy expensive electronic gadgets from them, as these are available in greater variety and cheaper elsewhere.  When I go to Radio Shack, I am looking for parts and electronic hardware -- wire ties, battery holders, LED's, relays, fix-it stuff and hobbyist stuff.  Whenever they don't have what I want, I am bummed out and disappointed.  I don't want to buy a telephone from you, I want speaker wire or connectors or whatever!!!  To those who say "you can't make money selling that kind of stuff," I say figure out a way to make hardware and tools and small parts profitable. If I can't get that kind of stuff from Radio Shack, where the h*** am I supposed to get it?  Nobody else carries it, and I hate, hate, hate ordering stuff online because I can't look at it before I get it.  Radio Shack has a market but has to be responsive to it.
Apr 25, 2012 1:55PM
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You know, there was a time in America when people liked to fix stuff, build stuff, invent stuff... radioshack was a great source for small electronic parts.

 

Seems folks today don't care or don't think the skills are worth acquiring anymore. Sad, very sad.

Apr 24, 2012 10:31PM
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Radio Shack to me has always been a niche product store, for that fuse or cable fitting I needed.  I've seen them reinvent themselves many times over since they were acquired by the Tandy Corp decades ago.  They may not survive with their current product mix, but I have a feeling that they could re-emerge once again as the niche store they have always  been.
Apr 24, 2012 4:29PM
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Its not a hobby store anymore. Its a phone store. Radio Shack sold itself out by trying to sell phones. Half their store is taken up by phones. Is that really such a high profit item? I guess not.
Apr 24, 2012 4:09PM
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As an amateur radio operator I "USED" to buy a great deal of my equipment and parts thru The local RADIO SHACK or from they're catalog. Today there is no catalog and the local store has nothing but cell phones or toys, neither of which are of any interest to me. And it's a shame because it was radio equipment that built the company in the first place.  
Apr 24, 2012 3:45PM
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The Shack used to be the place for hobby electronics now all you hear is "Do you need a cellphone". They still have limited stock of electronic components and is the only reason I go there still! I will always go there as I can remember going there as a kid!
Apr 24, 2012 4:28PM
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Back in the 1980's-90's I was a regular customer of RS, but high prices and poor customer service drove me away.  Although I don't expect them to beat the lowest price I can find online, pricing everyday items like cables, SD cards and Bluetooth headsets at 2-4x the price of online retailers isn't going to earn my business.  The final straw was about five years ago when I called a RS store for a cordless phone battery that I needed .  The store was located across town (about 20 minutes driving), and when I arrived about 10 minutes before the store's closing time, the store's doors were locked.  Worse yet, the employees were still in the store and pretended not to notice my knocking on the glass door.  Finally the "assistant manager" opened the door just enough to say they were closed.  When I pointed out that the sign said they were open until 9pm, he said "Yeah, but it was slow tonight and we've already counted the drawer".
Apr 25, 2012 9:24AM
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Sorry folks, but if you are looking for that atypical part that no one else has there is a good chance you will find it, or be able to order it, from Radio Shack.  I am a do-it-yourselfer and they have saved me thousands of dollars over the years.  The problem is that we have become a "throw away" society in which people are tossing $400 pieces of hardware into the trash that can often be fixed for less than $10 if they would just take the time to find out how to do the repair on the Internet.  Thousands of videos are on youtube now showing you how to repair just about anything you can think of.  Try it some time!
Apr 24, 2012 9:33PM
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We had a saying in the day. "Dance with the one that brung ya". Radio Shack abandoned it's customer base when they started selling more "consumer" products, and less components that helped the hobbyists building their own creations. Wether it might be resistors, capacitors solid state devices, in the 80's you could find what you needed or a close second at Radio Shack. NO MORE. Their component stock is merely token...
Apr 25, 2012 6:54AM
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I went into the local radio shack for some radio gear. I waited 15 minutes while every employee was writing phone contracts, or dealing with phone issues. When someone finally waited on me, they told me they don't carry ham radios any more. While waiting, I looked at their electronic stock. WAY overpriced.

 

The local store is 50-60% centered on phones. I can get them at walmart.

 

The chain has lost it's focus. It should be called "cell phone shack".

Apr 25, 2012 11:39AM
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Radioshack is one of the only places to buy electrical components.  When I needed some resistors thats where I went.  Sure they are cheaper online, but if you don't have the time to wait for shipment there is nowhere else you can get things like that.

Apr 24, 2012 4:09PM
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It's funny, the stores are probably about 1250 square feet or so and they usually have three employees. When I go in they are on me within three steps of the door, asking if they can help me find something. So i tell them I'm looking for something off the wall like a short range magnehelic diode. "Uh, no, we don't carry those."  So, then i go over to their component drawers and get what I need......I mean where else are you going to go for a resistor or a battery clamp on a Sunday afternoon? i worked in a RS when I was a kid in the 70s. Remember 4 channel stereo? I sold a bunch of them.
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