RadioShack hopes for dramatic turnaround

RadioShack hopes for dramatic turnaround
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RadioShack hopes for dramatic turnaround RadioShack hopes for dramatic turnaroundRadioShack has been plagued with challenges throughout recent years. It suffered from decreased product demand, rising online competition, failed turnaround strategies and turnover at the top of the ladder.


The company is currently under the leadership of its fourth CEO in three years. Joe Magnacca has plans to cut inventories and secure new liquidity to help turn the suffering company around. Investors are hoping for a miraculous rejuvenation like Best Buy experienced. Radio Shack shares are up 84% this year and have been trading near resistance. So has the stock become a buy, sell or hold?

Analysts point out that Best Buy is evidence that dramatic turnarounds do happen. Its stock has improved 220% this year. RadioShack has had a healthy return this year, which has been a pleasant surprise. Despite the improvement, the company’s shares are down 58% from their levels in January 2012. Stock Traders Daily said the stock is at long-term resistance, so despite its improving levels there are still some things to consider. In efforts to raise cash, Radio Shack is reducing stocked items. Stock for the company is trading around $4 and the balance sheets shows $4.33 in cash per share. The main concern is the debt is currently at $7.20 per share.

The current CEO has brought in a new investment officer and investment banker in what many people say is a move to do some refinancing and raise some liquidity. Reports indicate that Radio Shack leases the majority of its retail property, which means it owns very little real estate. The company does not have much security to use as collateral with potential lenders. Rumors that have been published in media accounts indicate that the company hopes to have a financing deal secured by October. The stock has been moving on the speculation of potentially refinancing its debt.

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Back in 2008, the operating margin for the company was 7.6%. The operating margin has fallen -2.7% during the last 12 months. The company is working to improve the retail stores, according to insiders. RadioShack just opened some concept stores, which are designed to reposition the brand and give a fresh look to the retail stores. The company opened it third high-touch store during August on Long Island. The stores feature a speaker wall and interactive designs that will help shoppers experienced technology on site.


  • p8ntball

    Radioshack has done so poorly because for the past few years they treated every employee as if they were the electronics it carries, easily replacable. They made no effort to hide that fact either, routinly telling associates and managers that there are plenty of other people who want the job. The company essentially treated employees as if they were all making large sums of money and had to perform, all while paying little more than minimum wage if any, and expecting professional sales quality from high school students. The company may be treating employees better now which is why sales are going up, they realized 400% annual turnover in all job categories, including managers and district managers, was the problem. Radioshack was very well known for training people thay once trained would immediatly leave for better paying lower stress positioms with competitors.

  • drector

    Radio shack is failing for a lot of reasons. 1. They are ignoring what used to be their core customers, tech enthusiasts and do it yourselfers. Once one could walk into a radio shack, ask a tech question, and get a decent answer. Those days are gone. 2. Their prices are higher than any of their competition, at least in my area, and much higher than online prices. 3. The very name is outdated. I doubt they sell many radios these days. When I walk into one they seem only interested in selling me a cell phone and if I want something else lose interest quickly. Change the name to Techshack, or Tekshak if they want to be cute.

    • Marcel

      Your right, and if the “lastest” CEO thinks he can REDUCE STORE STOCK any further, let it be known, that will deepen their woes.

      Even when one calls ahead and they say they have your part in stock, rest assured, what you requested, will be that empty hook on the wall when you get there.

      They barely have a handful of electronic fuses anymore!

      Realistically (pun intended) they no longer carry what the brand core was all about. Anyone can order anything (parts wise) online elsewhere, but creative people and fix-it folks should be RS’s domain on the retail side, because we don’t want to wait for shipping, nor incur that added expense.

      They need greater stocks of electronic parts, not less, for us to set foot in their store, as it would be their only advantage over Amazon. Otherwise, they will be just so much more dead retailer meat.

      Ayez un beau jour,

      P.S. When you call an RS store to check stock, make sure you get the persons name, ask them how many of those parts are listed in their database at the store and how many are on the wall or in bin. Then ask them to grab it and hold it for you, will call.