This story has been updated from 11:12 am EDT to include comments from Gary Lee of InReality and a stock price update.
NEW YORK (TheStreet) -- Shares of RadioShack (RSH) were tumbling 9.4% to $1.39 on Tuesday after posting dismal first-quarter results. The electronics retailer posted a loss of 97 cents a share compared with a loss of 28 cents a share in the same period last year. Analysts were expecting RadioShack to post a loss of 52 cents a share for the quarter, according to Thomson Reuters.
Net sales slid 13% to $737 million. Comparable store sales -- those stores open a year or more -- were down 14% driven by lower traffic and "soft performance" in its mobile business as consumers went elsewhere for their smartphones and tablets. Strong promotional activities from the likes of Best Buy (BBY), Walmart (WMT), Target (TGT), Amazon (AMZN) as well as the wireless carriers like Verizon (VZ), AT&T (T) and T-Mobile (TMUS) hurt sales and gross margin performance."RadioShack suffers from a severe identity crisis both within their corporate walls, but more importantly in the minds of the consumer," said Gary Lee, CEO of InReality, a customer experience and design firm in Atlanta. "While their most recent ad campaign jokingly stated RadioShack was getting rid of the 1980s, their store design, merchandising and product selection has not followed suit, leaving the consumer to wonder why they should ever shop at RadioShack versus other consumer electronics stores.
"Although RadioShack may have maintained ownership of the market niche of electronics hobbyists needing obscure resistors, transistors, LEDs, etc., they have lost the mainstream consumer -- perhaps forever. Without immediate and serious surgery to revamp their stores to clearly show why they matter to customers, and then deliver a compelling shopping experience to consumers in strip malls everywhere, RadioShack is doomed to continue a long slide to oblivion," Lee said in an email.
RadioShack said in March that it planned to close 1,100 stores, but that plan was amended last month over issues the company was having with its lenders about closing the stores. RadioShack said Tuesday that its expects to close 200 stores, that's about 5% of its U.S.-based stores, this year. As part of its turnaround plan, RadioShack's also CEO noted that the company is creating a pipeline of new higher-margin and exclusive products which includes partnerships with Quirky and PCH. It's also looking to remodel some stores into so-called concept stores to drive sales.
RadioShack is on Goldman Sachs "Americas Sell List." Analyst Matthew Fassler has a $1 price target on the stock.