Tuesday, March 04, 2014, 04:45 pm PT (07:45 pm ET)
RadioShack to close up to 1,100 stores as earnings dip well below expectationsRadioShack on Tuesday announced it will be closing up to 1,100 stores after reporting a $400 million operating loss for 2013, highlighting the Apple retail partner's struggle with adapting to the fast-changing consumer electronics market.
RadioShack's online store locator shows an abundance of New York locations. | Source: RadioShack
According to The Wall Street Journal, RadioShack made the announcement alongside lower-than-expected quarter four financial results. The company logged a loss of $191.4 million for the quarter, up from the $63.3 million lost a year earlier.
Analysts polled by Thomson Reuters expected RadioShack to announce a per-share loss of 14 cents, but the final tally came out to a much higher $1.46 per unit. The retailer was also figured to hit $1.12 billion in sales for the December quarter, but ended up with $935.4 million, a 28-percent year-over-year drop.
Well known for having a near-critical mass of stores spread across the country, RadioShack will close up to 1,100 under-performing locations. The number accounts for approximately 26 percent of company-owned outlets.
"Within five miles of my home, I have eight RadioShack locations," said RadioShack CEO Joe Magnacca, referring to the overcrowded distribution of stores.
RadioShack reported slow sales of phones, tablets and accessories, which usually account for half of the company's business. The retail chain once catered primarily to DIY enthusiasts and was slow to adopt mainstream consumer electronics.
In recent years, the company has made efforts to offer smartphones and tablets at low prices, including regular discounts on Apple's iPhone. In 2010, for example, the Apple retail partner was the nation's second-largest iPhone seller in terms of brick-and-mortar stores that carried the device.
It appears the aggressive price cuts and limited-time-only discounts were not enough to buoy revenue, and in fact may be to blame for the poor quarterly performance.
"Simply put, we exceeded our organization's capabilities by trying to do too much too quickly," Magnacca said.
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