Report: RadioShack planning to close 500 stores
02/04/2014 3:25 PM
02/04/2014 4:01 PM
A day after being lauded nationally for airing one of the best Super Bowl ads, RadioShack saw its stock price plummet on Tuesday as The Wall Street Journal reported that it’s planning to close about 500 stores.
Citing “people familiar with the matter,” the Journal said the closings would occur in the coming months as the Fort Worth-based consumer electronics retailer continues to work with its advisers to restructure its business.
RadioShack has about 4,300 company-owned stores, so 500 stores closings would trim about 11 percent of its store base. RadioShack declined to confirm the report, saying it does not comment “on rumor or speculation.”
On Wall Street, RadioShack stock (ticker: RSH) closed down about 5 percent, or 12 cents, at $2.36. The stock had fallen more than 10 percent after the report was first posted earlier in the afternoon.
RadioShack has suffered losses for seven straight quarters as it lost sales to big-box rivals and Internet retailers. In the past year, a new management team led by Joseph Magnacca, who was hired from Walgreens as CEO about a year ago, has been redesigning stores and restructuring finances in an effort to turn the company around.
In December, RadioShack lined up $835 million in new financing, including a $535 revolving line of credit and $250 million five-year secured loan, which was used to refinance some debt and strengthen its balance sheet. The company has enlisted turnaround adviser AlixPartners and investment bank Peter J. Solomon to help it develop new strategies.
On the retail front, Magnacca has opened a series of concept stores, including one in Sundance Square, trimmed inventories and reorganized store displays to emphasize higher-margin sound and life fitness products over phones and accessories.
He has also launched a new marketing campaign, including a well-received Super Bowl ad using 1980s celebrities including Hulk Hogan and Twisted Sister singer “Dee” Snider to highlight its efforts to refresh the brand. Advertising experts called the ad one of the best of the Super Bowl spots and praised the company for acknowledging that its image is dated.
RadioShack expects to report fourth-quarter results later this month.
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