In February 2015, RadioShack filed for bankruptcy, and are now filing for bankruptcy again just two years later. They have had 6+ CEOs in the past 10 years, and they are now planning on closing 200 stores. Their current partnership with Sprint hasn’t panned out the way that they had wanted, initially hoping to increase store foot traffic by offering Sprint products and services in stores. Instead, Sprint has been facing its own challenges in the mobile market.
...in the years since RadioShack has emerged, both Sprint and RadioShack have been challenged. Sprint, whose network is viewed as inferior to the country's largest carriers, Verizon Communications Inc and AT&T Inc, has been forced to offer heavy discounts to grow its business.
Further, competition from online stores selling at cheaper prices has decreased RadioShack’s market share considerably.
RadioShack meanwhile has struggled to compete against internet behemoth Amazon.com Inc and for the attention of shoppers who increasingly wait for deep discounts before making a purchase. The influx of cheaper copycat consumer products manufactured abroad has also hurt the business.
So, Monkeys, I’m asking you: given the problems they have faced in the last two years, do you think that RadioShack has the ability to come up with a strategy to turn itself around, and if so, what would it look like?
The Demise of RadioShack (Originally Posted: 10/04/2014)
Two weeks ago RadioShack announced that it is seeking a lifeline to avoid declaring bankruptcy. The company is quickly running out of cash and has no foreseeable plans on how to go about saving itself.
It is no surprise that RadioShack, an international electronics retailer with stores mainly in the US and Europe, has been struggling to compete in a market where e-commerce giants like Amazon and Ebay are quickly taking over. The company’s earnings and same-store-sales have been disappointing shareholders quarters after quarters. Further, the company has gone through four CEOs in three years in an effort to recover, but the future remains bleak.The sad and likely truth is there appears to be no light glimmering at the end of this tunnel, unless Standard General, a New York-based hedge fund, and UBS come through with a plan to help the company revive its balance sheet.
The capital infusion is priced at a hefty $585 million financing package, of which UBS will coordinate $325 million while Standard General supplies the rest. The loan is aimed at helping the company access cash in preparation for the upcoming holiday season. As of Aug 2nd, RadioShack only has $30.5 million or about $6,800 for each of its 4,485 stores. Earlier this year, RadioShack planned to shut down 1,100 stores, but had to scale down to only 200 stores due to opposition from lenders, who hesitated giving more money needed for breaking leases and disposing inventory to close down stores. The reason why there’s no beaming beacon is because it is unlikely that RadioShack will survive even if it’s hopped-up on cash. The electronics retail market is fiercely competitive, given the existence of companies like Walmart, Best Buy, Target, Amazon etc. Moreover, half of the company’s sales come from products such as smartphones and other wireless electronics, all of which have razor-thin margins. The company’s effort to increase its product line and shift toward selling products with higher margins has also not yielded positive results so far. Time after time, the company reports operating losses.
Of course, the ending of RadioShack is not yet written as talks are still ongoing between UBS and Standard General. However, it was interesting to read an article advocating that Amazon take over RadioShack’s pieces if the firm does indeed files for chapter 11. According to the article, taking over RadioShack’s 4,000+ stores would allow Amazon to narrow the gap between “bricks and clicks” by showcasing Amazon’s products such as the Kindle, Fire smartphone, and Fire TV in physical stores. The purpose of this is to allow customers to actually play around with the product and see them in action before committing to buying it. Amazon would also be able to expand on its grocery services give the large number of local RadioShack stores.
So, do you think RadioShack could survive and do you see Amazon shifting toward having a physical store?
Where will I buy my batteries if radio Shack closes?!
Place needs to go. It has no niche and I literally don't know how it would differentiate itself in the future.
I work part-time at a major appliance retailer, and customers literally bring up Radio Shack as a joke. Hard to imagine them ever surviving if customers don't want them to.
The term "Radio Shack" brings me to my childhood in the 80s, right next to Circuit City. Unless they change their name and try to become a wannabe Amazon, I dunno what the point is of dragging this thing out.
Used to love radio shack but that place needs to go.
Back in the day it was awesome for electronic tinkering. Now it's a crappy mini best buy.
Good money chasing after bad. Period. There are no outs for Radio Shack. This is literally bridge financing to nowhere. Their only real hope would be to be bought by someone by why bother when they are circling the drain. Any suitors will wait until bankruptcy to swoop in.
I get it. Standard trying to save it's 10% stake. They are better off writing this one down and moving on.
i did my part...bought a $20 charger since i lost mine somewhere. was really depressingly empty when i walked in. one right around the corner.
RadioShack is the first name that pops into my head in the "I lost/forgot my phone charger" scenario. So at least they have that going for them...
Lately I've found I actually check RadioShack first when I need something electronics-related. I guess I'm just a sucker for an underdog story.
This has been a long time coming. Death is inevitable
M&A target for Alibaba?
"@GSElevator #1: We should elect Radio Shack's CEO as President. Only a miracle worker can keep a shitty battery store in business for 30yrs." - 9 Aug 2012
It's a good point to be made considering the likes of CompUSA and Circuit City never made it and Best Buy is on the way...
Probably M&A target for alibaba
The next store that pops into my head after I hear RadioShack is Circuit City.
Dead cat bounce
I actually just purchased my iPhone 6 at RadioShack two weeks ago. When I told my friends the unanimous response was, "They still exist?" .. Pretty sad. Amazon doesn't need to showcase their products in their own brick and mortar stores - that's what Walmart, Target and other big retailers are for. Lol.
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