Radio Shack (RSH)
Its customers have questions, but the longtime electronics retailer is running out of answers.
Once the go-to spot for splitters, switches, cables, antennas and other components, Radio Shack has become the loathed last option for any of those items thanks to an increased focus on mobile device sales and a commission-hungry workforce bent on annoying revenue clear out the front door. Its storefronts stocked with narrow aisles of electronic minutiae have become afterthoughts to wireless kiosks at Sam's Club that gave way to similar kiosks at Target (TGT).
As a result, revenue at company-owned stores for the first nine months of the year is down by nearly $130 million. Sales of its signature items such as converter boxes and accessories dropped 6.3% last quarter compared with the same time last year, while sales of camcorders, digital cameras, MP3 players and other consumer electronic devices was off by more than 20%.We'd love to tell you that all of this is a new development, but Radio Shack has been in steep decline since at least 2006 -- when it closed 500 stores and laid off nearly as many workers at its corporate headquarters. Shareholders were rewarded for that move with a $31 drop in share price since the cuts were made and a 33% drop within the last year alone. Tech geeks are increasingly getting their hard-to-find components on Amazon and other online sites, mobile devices can be found just about anywhere -- including at Verizon (VZ), AT&T (T) and Sprint (S) stores that cut out the middle man -- and just about every other retailer has received the message that when the customer wants help, he or she will ask for it. RadioShack can swap out its T-Mobile partnership for Verizon if it wants to and put as many kiosks in Target stores as its heart desires. But it shouldn't expect holiday shoppers to pay for gift cards to bricks-and-mortar shops they can't stand and that Radio Shack itself is seemingly abandoning. People laughed when the company tried to rebrand itself as The Shack a few years ago, but Radio Shack's becoming as irrelevant as radio itself. -- Written by Jason Notte in Boston.
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