The Five Dumbest Things on Wall Street This Week
07/28/06 - 06:59 AM EDT
Colin Barr
4. Radio Daze
The roof is caving in at RadioShack (RSH Quote - Cramer on RSH - Stock Picks). The Fort Worth, Texas, consumer-electronics retailer rolled out its latest earnings debacle last Friday. The company swung to a second-quarter loss from a year-ago profit, stung by restructuring charges and flat sales. RadioShack has been a mess for years. But even by those standards, the latest quarter was a monument to futility. Cell-phone sales are generating windfall profits at players ranging from Cingular and Verizon Wireless to Motorola (MOT Quote - Cramer on MOT - Stock Picks). Nokia (NOK Quote - Cramer on NOK - Stock Picks) expects industrywide unit sales to rise 15% off last year's record pace. Yet somehow, RadioShack managed to post a double-digit drop in postpaid wireless-handset unit sales in core stores during the second quarter. "RadioShack's wireless tactics did not sufficiently deliver results in the face of changing competitive dynamics and maturing consumer demand," the company explains with typical understatement. "To exploit its unique position in the marketplace of wireless retailing, the company is evolving its approach in pricing, promotion, merchandising and the selling process." Good idea. And just what is RadioShack doing to evolve its approach? Why, "During [the] second quarter, the company executed a number of tactics," RadioShack advises, "such as overnight replenishment and wireless mystery shops." They're right about one thing: It's a mystery why anyone still shops at RadioShack.
Dumb-o-Meter score: 79. Mystery shopping entails doing undercover research and assembling "best practices information," a spokeswoman explains.
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