Radioshack Celebrates One Year Anniversary Of Closing 500 Stores By Closing 500 More

Tyler Durden's picture




 

If it seems like it was exactly a year ago that turmoiling retailer Radioshack shut down 500 stores due to lack of consumer interest in its wares (and or consumer disposable cash), it is because it was. So how does Radioshack demonstrate its morbid sense of humor on the one year anniversary of said announcement? Well, by closing another 500, or about 12% of the retailer's total 4500 outlets currently in existence.

The WSJ reports that the company which once was the butt of all LBO-rumor jokes (and still is, only this time in the context of an M&A-rumor with JCPenney and/or the Joseph A. Wearhouse joint venture), is "planning to close around 500 stores in the coming months as the electronics retailer continues working with advisers to restructure the company."

RSH's pre-bankruptcy operation problems are well-documented. And funded - "in October, RadioShack secured $835 million in loans to refinance about $625 million of debt. Those funds, from a group led by GE Capital, also freed up cash for RadioShack's overhaul." Of course, when said overhaul fails, the loans rolls into a DIP loan which funds the company's bankruptcy.

As was well-documented during the Super Bowl, the Fort Worth, Texas, retail chain has been working on transforming its image from an old-school electronics store into a destination for shoppers looking for entertainment gadgets, like headphones and smartphone cases. Sadly, it appears to not be working.

The retailer has struggled to reverse a string of losses deepened by a sales strategy focused around smartphones, which failed to improve revenue over the past two years.

 

RadioShack executives last year suggested the company would resist downsizing its store footprint as they focused most of their attention on reinventing the brand's image. Stores might close in one section of a neighborhood to set up shop in more highly trafficked locales, but the number of outlets would stay the same, they had previously said.

 

"I think we're a 4,000-plus network," RadioShack Chief Executive Joe Magnacca said in a November interview. "My job is to make sure that we've got the market covered."

That, or a '0-precisely network.' And while the Shack struggles to find just what market it is that it covers, if any, the population will enjoy how it spends several months of cash flow on amusing Super Bowl gimmick ads such as this one which is a fitting - and hilarious - epitaph of what happens to every retailer that stop adapting to its current environment.

 

 

Finally, while the ultimate fate of Radioshack is quite clear to most, a far more important topic is what happens to all the commercial real estate secuiritizations and/or malls that currently have a RSH location which is about to shutter. Then again, this is the new normal, and things such a fundamentals and cash flows are merely an irrelevant footnote.

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Tue, 02/04/2014 - 14:42 | 4400863 HyBrasilian
HyBrasilian's picture

The 80's called... They want their EMPLOYMENT NUMBERS back...

Tue, 02/04/2014 - 15:01 | 4400945 redpill
redpill's picture

wtf, where am I supposed to buy weird shaped batteries and obscure cable connectors that cost more than the thing I'm connecting?

Tue, 02/04/2014 - 15:04 | 4400957 Hippocratic Oaf
Hippocratic Oaf's picture

Zh reports on RS at 1:37, CNBS reports on RS at 1:55.

I swear they get half of their info from ZH.

Tue, 02/04/2014 - 15:07 | 4400978 SilverIsKing
SilverIsKing's picture

Where can I go to purchase a radio?

Tue, 02/04/2014 - 15:11 | 4400995 Oh regional Indian
Oh regional Indian's picture

To the shack I suppose Silver....obvious, eh?

 

Tue, 02/04/2014 - 15:26 | 4401044 superflex
superflex's picture

If they only sold guns and ammo, they wouldn't have this problem.

Tue, 02/04/2014 - 15:41 | 4401085 kralizec
kralizec's picture

Maybe drones would be more fitting for them to sell, eh?

As well as anti-drone tech.

Tue, 02/04/2014 - 17:07 | 4401502 fonestar
fonestar's picture

If Radio Shack really wanted to prove itself modern and ahead of its competitors it would accept Bitcoin right away.

Tue, 02/04/2014 - 16:09 | 4401227 Agent P
Agent P's picture

I was at Barnes & Noble yesterday buying a book for my son's birthday, and I saw this behind the counter:

http://www.barnesandnoble.com/p/toys-games-parrot-ardrone-20-quadricopte...

My first thought: "What the hell are they doing selling drones at Barnes & Noble?"  

My second thought: "What the hell am I doing buying a full priced book at Barnes & Noble?"

Tue, 02/04/2014 - 16:26 | 4401307 radwon
radwon's picture

Got mine off Amazon. They are something. Two camera live feed with recording. Checking gutters for leaves on the two story home while on the ground. Very entertaining.

Tue, 02/04/2014 - 19:19 | 4401935 object_orient
object_orient's picture

So were there leaves? Don't leave us hanging!

Tue, 02/04/2014 - 22:39 | 4402507 akak
akak's picture

Get your mind out of the gutter!

Tue, 02/04/2014 - 19:36 | 4401993 Blano
Blano's picture

Face it...we know the two story home you're talking about belongs to your hot neighbor.

Tue, 02/04/2014 - 18:04 | 4401713 Silver Bully
Silver Bully's picture

'Maybe drones would be more fitting for them to sell, eh?

As well as anti-drone tech.'

 

I can tell all the posters (and the author) who haven't been in a Radio Shack in a while. Seriously, does anyone think a retail chain with over 4,000 locations that SELL SMARTPHONES is going to go away overnight? These guys aren't JC Penny.

If you want to understand why Radio Shack sticks around, just understand 2 things:

1. Their primary business is mobile phones (and has been for years). Unless demand for smartphones and their accessories does an overnight collapse, the Shack will continue on. Markup on Radio Shack-branded smartphone accessories is astronomically high. We're talking 60-70% profit or higher. So it doesn't take many sales to make a profit for them. Which leads to #2

2. Radio Shack owns their own battery and electronics supply chain, which nets them over 90% pure profit on each battery or diode or transistor sold. This has been a core part of their business, which allows them to subsidize a lot of the stupid crap that people look at and go 'wait, is that a ham radio? Oh right, it's Radio Shack.'

This is how they will continue to stay in business. The only problem they have is the overexpansion in the past decade. If they trim their retail locations back to sustainable levels (and don't get too levered up with stupidly bad debt), they'll stick around.

Tue, 02/04/2014 - 20:26 | 4402134 Offthebeach
Offthebeach's picture

I can rember buying a new computer every year. Ditto laptop. Now? Haven't touched the pc in years. Its just a storage file im afraid to toss. The lap I use every now and then. PC and lap sales have crashed. I have a Kindle HD and have half transitioned my reading addiction to it. Ive mused on buying a Ipad, or Surface Pro....but..but why? Anyway I broke my HTC1 and got a Samy III Galaxy. I can't see getting another phone. It does all I want. Just like the 5year old lap top. I used to get excited about new computers/phones but now they are getting as unthought of as a Bakelite rotary dialup. They've gone from marvels to utility tools, to be replaced when lost or broken.

Tue, 02/04/2014 - 15:40 | 4401090 nuclearsquid
nuclearsquid's picture

or a tyler is a writer/producter at CNBS.

BTW, why are you watching CNBS?

Tue, 02/04/2014 - 16:02 | 4401197 Murf_DaSurf
Murf_DaSurf's picture

 

 

 

Years ago, this was the first store that ever asked me for my phone number to buy something with CASH.

Of course I refused.

RS killed themselves with that 'smart' idea.

Tue, 02/04/2014 - 19:50 | 4401584 scam_MERS
scam_MERS's picture

...and to return anything you bought there with cash, same story. Last time I returned something, they wanted my full name, address, phone no., email, the works. I said "Really? I bought this with cash, it's still sealed and unopened, and you want all this info?" The counter drone says "we can't do a return without this information". I flat out told him I'd make up a name and all the rest, he just shrugged his shoulders - so that's what I did. He didn't care, even though I was obviously making it all up. In the end, I had to sign the receipt, so I signed the same fake name. (H/T Futurama: shoulda used "I.C. Weiner" for name but didn't think fast enough)

What a bunch of idiots. There's several of these Radio Shit stores near me, and they're always completely empty except a couple of clerks wandering around with nothing to do. When you walk in, you feel like you just dropped into a shark tank. Not a good feeling...you know you're about to get ripped off. They won't be missed when they go TU, just like Sears/Kmart. No loss.

Tue, 02/04/2014 - 15:40 | 4401092 CPL
CPL's picture

http://www.amazing1.com/

Prices and variety are much better.  And they sell everything.

Tue, 02/04/2014 - 15:41 | 4401103 tip e. canoe
tip e. canoe's picture

including tesla coils, sweet

http://www.amazing1.com/tesla-coils.htm

Tue, 02/04/2014 - 16:13 | 4401251 CPL
CPL's picture

It's the purest of techie pornography, so much awesomesauce.  Remember when radio shack sold this stuff?

http://www.amazing1.com/products/200-in-1-electronics-lab.html

Tue, 02/04/2014 - 18:15 | 4401762 Occams_Chainsaw
Occams_Chainsaw's picture

Had several of those.  Loved them and kept me busy for hours and hours.

Tue, 02/04/2014 - 19:41 | 4402018 Jerome Lester H...
Jerome Lester Horwitz's picture

Back in the early eighties when I was a Freshman taking Electronics 101 walking into Radio Shack was an awesome thing. So much cool stuff to build things with. Walking in one today feels like a miniature Best Buy.

Tue, 02/04/2014 - 19:55 | 4402045 U4 eee aaa
U4 eee aaa's picture

WHOA! Now that brought back some memories!

Tue, 02/04/2014 - 17:07 | 4401509 Lost My Shorts
Lost My Shorts's picture

The problem with Radio Sharks is -- when you walk in to buy a doodad that cost 14 cents to manufacture, and you see they charge $9.95 for it, you walk out and never go back.  Their entire original customer base walked out and never went back.  It was so clever to improve cash flow by marking everything up 1,700% -- some MBA retail genius thought of that.

Tue, 02/04/2014 - 19:56 | 4402055 U4 eee aaa
U4 eee aaa's picture

Yep. You never want to give people the choice between buying the replacement part and throwing the thing you're trying to fix in the garbage

 

Most of the things you buy at RS are in the 'Do I really need this?' category

Tue, 02/04/2014 - 15:24 | 4400959 TruthInSunshine
TruthInSunshine's picture

This song is an old pop hit from the 80s -*** The track topped several international music charts and has been covered by many recording artists. Its music video was written, directed, and edited by Russel Mulcahy, and is well-remembered as THE FIRST MUSIC VIDEO SHOWN ON MTV IN THE UNITED STATES AT 12:01am ON AUGUST 1st 1981 -*** so it's appropriate as a metaphor for most things a) brick & mortar and b) related to DISCRETIONARY spending, in our new Depression (Best Buy, JCP, Sears/Kmart, Rite-Aid, Blockbuster, Gamestop, Many Restaurants, The GAP, American Eagle, Dots, FYE, Macy's, Kohl's, Lord & Taylor etc. etc. etc. etc. etc. etc).

The tsunami of store closings has only yet begun.

We've had 35+ years of a credit/debt crack up boom and expansion of the banker fractional fiat reserve crack supply, and 2008 was merely the appetizer on the down payment of the hangover.

VIDEO KILLED THE RADIO STAR LYRICS - BUGGLES

I heard you on the wireless back in Fifty Two
Lying awake intently tuning in on you.
If I was young it didn't stop you coming through.
Oh-a oh

They took the credit for your second symphony.
Rewritten by machine on new technology,
and now I understand the problems you can see.
Oh-a oh.

I met your children.
Oh-a oh.

What did you tell them?

Video killed the radio star.
Video killed the radio star.
Pictures came and broke your heart.
Oh-a-aho oh

And now we meet in an abandoned studio,
We hear the playback and it seems so long ago,
And you remember the jingles used to go?
Oh-a oh.

You were the first one.
Oh-a oh.

You'll be the last one.

Video killed the radio star.
Video killed the radio star.

In my mind and in my car,
we can't rewind we've gone too far.

Oh-a-aho oh,

Video killed the radio star.
Video killed the radio star.

In my mind and in my car,
we can't rewind we've gone too far.

Pictures came and broke your heart,
Put down the blame on VCR.

Tue, 02/04/2014 - 17:17 | 4401564 Straw Dog
Straw Dog's picture

Remember it well, used to ice skate to it:

http://www.youtube.com/watch?v=Iwuy4hHO3YQ

Tue, 02/04/2014 - 15:06 | 4400966 Ban KKiller
Ban KKiller's picture

More sigs of robust economy!   

GE capital...what could go wrong? Giant debt works for us!  Until it does not. Our books are not for inspection, trust us.

Tue, 02/04/2014 - 15:16 | 4401016 Freddie
Freddie's picture

Killed by the ObamaPhone.   The few times I was in one recently, it has become a phone store.  Most of the customers were Obama voters.  Sad.

Tue, 02/04/2014 - 14:41 | 4400865 kchrisc
kchrisc's picture

I've missed Radio Shack, the real Radio Shack, for years.

A real shame.

Tue, 02/04/2014 - 14:52 | 4400906 HelluvaEngineer
HelluvaEngineer's picture

What do they do again? Sell Verizon phones?

I went into one about 10 years ago and they were selling all their electronics bin stuff on clearance for about 5% of what it sold for normally. Resistors, LEDs, even grounding straps. I've got 3 lb. coffee cans full of the stuff.

Tue, 02/04/2014 - 14:52 | 4400914 ParkAveFlasher
ParkAveFlasher's picture

WTF will I do now, that I can't get my 10ft roll of speaker wire for $35?!  The real question is, how tf long have these guys stayed in business selling cheesy RC toys and off-model electronics?  Pretty f'n long.  Whoever manages this company knows what they are doing, quite frankly. 

Tue, 02/04/2014 - 14:58 | 4400935 Turin Turambar
Turin Turambar's picture

^ +100

 

I've always wondered how Radio Shack stays in business.  Speaker wire and an electronic battery here and there for me over the past 30 years.

 

Tue, 02/04/2014 - 15:11 | 4400997 SilverIsKing
SilverIsKing's picture

Oh, so you never tried their hookers?  The best!

Tue, 02/04/2014 - 17:38 | 4401648 ParkAveFlasher
ParkAveFlasher's picture

If I could some service at the counter, maybe, yes, I would have tried their hookers.  Yes, I was waiting on line here first, can you please just check out these wire snippers, I don't want to leave the mall empty-handed, my psyche can't take it this Saturday afternoon.

Tue, 02/04/2014 - 15:41 | 4401097 nuclearsquid
nuclearsquid's picture

2400% Gross margins basically

Tue, 02/04/2014 - 15:23 | 4401037 Lux Fiat
Lux Fiat's picture

Spouse's comment on seeing the Superbowl ad was "You mean they're still in business?".  Apparently.  Let's see if they can change business models as well as Madonna changed her image(s) in the 80s and 90s.

Tue, 02/04/2014 - 15:42 | 4401109 CPL
CPL's picture

There is still a good steady trade of parts out there because when you need a 200v 3ohm transitor for something, you really need it.

Tue, 02/04/2014 - 20:53 | 4402205 StychoKiller
StychoKiller's picture

Online is the way to go:  www.digikey.com, www.mouser.com, www.jameco.com

Tue, 02/04/2014 - 14:58 | 4400929 lasvegaspersona
lasvegaspersona's picture

They seem to be trying to replace geeks with breasts....might work...

Tue, 02/04/2014 - 17:42 | 4401663 ParkAveFlasher
ParkAveFlasher's picture

"We're just like Hooters, but instead of boobs and wings, we do boobs and cheap 500k fader pots!"

Tue, 02/04/2014 - 17:47 | 4401673 Freddie
Freddie's picture

Radio Rack.  "Our gals know resistors and have big hoots."

 

Tue, 02/04/2014 - 14:59 | 4400930 Canadian Dirtlump
Canadian Dirtlump's picture

old school radio shack was something else. If you ever wanted to try building a robot or a time machine, that was the place to go ( also in canada we have a place called princess auto with all sorts of odd jacked up gizmo parts ). As I recall they were also a repository of all manner of fucked up batteries too.

In Canada our Radio shacks became a chain called "the source." Honestly I don't know how or if they do well but the good thing about them is they seem to have popped up in alot of small towns which otherwise would not have a mega electronics store.

Tue, 02/04/2014 - 15:37 | 4401078 cynicalskeptic
cynicalskeptic's picture

Typical of how things have changed.  Nobody actually BUILDS ANYTHING anymore. Radio Shack was THE source for all the geeks who built their own, well... EVERYTHING.  But gone are the era of Heathkits and such - and all that represented.  You're not seeing garage based startups that build COMPUTERS anymore.  Nothing like Hewlett Packard - companies that started building THINGS.  Now it's 'social networking software' and such.  The engineering and building are done elsewhere.  Not so many Americans even doing the hardware design work anymore.

That applies to EVERYTHING - gone are the days of the 'shadetree mechanic/inventor'.  Not too many Americans are all that comfortable with tools of any kind and we're all the worse off for the change.

We've seen a push towards - what to me at least - seems to be vacuous intellectual narcissim - Look at these pictures of me, this is what I'm doing/thinking/eating/whatever right now.....what are YOU doing?  What is Justin Bieber doing now?  see the new selfie of Kim Kardashian?...... all pretty much iseless intellectual vomit.   Meanwhile the wealth of a society comes from producing and adding VALUE.  Mining ore, smelting metal, transforming that metal into somethign.  CUtting down trees, majinng things of wood, growing grain, making flour and then bread.  Chemically trasnformign oil into plastics and making things of that....... Most other things are OVERHEAD - functions which came into existence to SUPPORT THE CREATION OF WEALTH AND PRODUCTION OF VALUE.  Accounting kept track pf the sheep and cows you raised and traded.  The financial system came about to invest in the production of goods - to allocate capital efficiently.    'Service' economies cannot exist when there is no production of original wealth.  But that's what we have now.  And don't rebut with the 'movies/software/entertainment 'value creation'.  NOBODY would have any money to pay for any of those things - nobody would cae about those things without the wealth created elsewhere.  People care more about having somethign to eat and places to live (solid concrete 'things' that were produced in a process of adding value.

If Gilligan et al landed on a desert island today there wouldn't be any 'Professor' creating things for them.  They'd all die of starvation shortly after entering iPhone withdrawl.

Tue, 02/04/2014 - 16:25 | 4401310 akak
akak's picture

 

If Gilligan et al landed on a desert island today there wouldn't be any 'Professor' creating things for them.  They'd all die of starvation shortly after entering iPhone withdrawl.

That is one of the funniest, and truest, and saddest lines I have ever read here.

Tue, 02/04/2014 - 17:35 | 4401642 Meatballs
Meatballs's picture

"gone are the days of the 'shadetree mechanic/inventor'"

Still here and doing great! Thanks.


Tue, 02/04/2014 - 18:10 | 4401736 akak
akak's picture

 

"gone are the days of the 'shadetree mechanic/inventor'"

Rather off topic, but still an analogous situation: how many people actually cook at home anymore, or even KNOW how to cook?  I prepare probably 98% of all my meals myself, and increasingly get strange looks from people when I tell them that.

Tue, 02/04/2014 - 18:29 | 4401653 scam_MERS
scam_MERS's picture

Funny how you mention "Heap"kits :)) "Benton Harbor Lunch Boxes", etc. -- I built my first tube tester from Heathkit, the TT-1. Remember those? I had an old Weller soldering gun (didn't get the WTCPN iron until a few years later) that I used to put the whole thing together in a few days after school. I was so proud of that thing! (I was 13 YO at the time) My dad used to get mad because I take tubes out of our (working) TV just so I could "test" them. After I dropped and broke one, that was the end of spurious "testing". I put an ad in the local paper for free pickup of old electronics, and got a bunch of stuff to play with, one being an old Grundig console SW radio. After I got it working, I spent nights listening to overseas radio, and was facinated. The whole experience led me to become an electronics technician, which is what I spent the rest of my life doing. Today, no one wants to pay to fix anything, and so-called "technicians" today are just board changers, they couldn't troubleshoot to component level to save their life.

Sad, but virtually all of what I learned to do in my lifetime is now obsolete. IMO, being a technician was harder than becoming a doctor, since bodies stay more or less the same forever. Electronics was constantly changing, and you had to keep studying and learning new things every day. Toward the end of my time working as a tech, it was becoming obvious where it was all heading, when I saw more products thrown away than being repaired.

Wed, 02/05/2014 - 14:16 | 4404541 InflammatoryResponse
InflammatoryResponse's picture

cynicalskeptic,

 

you are SO right!!!!  the number of people out there that can even USE a tool is dwindling at a rate of freefall. 

 

if RS was smart they try to cultivate that again.  we need fewer selfies and more doers.

 

 

 

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