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TheStreet Open House

RadioShack's Earnings Miss Sees Sales Ebbing at Its Tired Stores

Stocks in this article: RSHBBYAMZNWMT

NEW YORK ( TheStreet) --  RadioShack (RSH) continues its spiral into obscurity as it posted a larger-than-expected quarterly loss Tuesday.

The U.S. electronics retailer reported a net loss of $98.3 million, declining from a $28.0 million loss in the same period a year earlier.

RadioShack's sales have been on a steady decline since 2010 as competition mounts from the likes of Best Buy  (BBY), Amazon.com (AMZN) and Wal-Mart Stores  (WMT), who offer wider selections for lower prices.

The company's stock price opened 15% lower on the news, falling from $1.54 to as low as 1.32 in morning trade. Shares pulled up to $1.36 in mid-afternoon trading.

RadioShack shareholders voiced their disgust with the direction of the company last week by rejecting the executive compensation package for a second year in a row.

Nearly 55% of votes were cast against the compensation plan in a nonbinding referendum at the shareholder meeting, up from 53% a year earlier.

"There's nothing that [Chief Executive Officer Joe Magnacca] has done that leads anybody to believe that he's the right guy to turn this business around," Anthony Chukumba, a New York-based analyst at BB&T, told Bloomberg.

The company currently faces a bevy of structural issues that are creating a divide between the retailer and customers.

For one, the stores are severely outdated. As consumers have migrated online, RadioShack continues to operate like a museum for vintage consumer electronics that were left behind in the 1990s. Consumers enjoy new, shiny objects to play with, a complete contrast to RadioShack, a store analysts have called "tired looking."

With regards to the actual merchandise, RadioShack mostly sells cell phones, which is becoming a dangerously saturated category. The company's lack of aggressive expansion into tablets or even Internet radio is another testament to its failure to adapt in the post-Y2K environment.

RadioShack announced plans in March to close up to 1,100 underperforming stores, which could be a small fraction of the closings to come if the electronic retailer doesn't make meaningful adjustments, fast.

RSH Chart
RSH data by YCharts

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At the time of publication, the author had no position in any of the funds mentioned.

Follow @macroinsights

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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