Previously reported that the electronics retailer would close approximately 500 under-performing locations this year, that number has ballooned to approximately 1,100 stores according to the New York Times. That’s a bit more than 20 percent of the total 5,000 stores currently open. RadioShack representatives did not indicate how many jobs would be eliminated or which stores would be selected for closure. However, the company will be basing closure decisions on recent financial performance, region demographics, rent costs, lease duration and vicinity to foot traffic.
News of the additional store closures is related to the $191 million loss the company took during the fourth quarter of 2013, traditionally the period when retail stores take advantage of a heightened level of holiday shopping. That figure is more than three times the $63 million loss the company reported during the fourth quarter of 2012. Some of these losses are being attributed to operational issues during the fourth quarter, basically not moving quick enough to restock in-demand products during the busy shopping season.
These losses were reported approximately one month after RadioShack management spent millions of dollars on an ad that aired during the Super Bowl. That ad was an attempt to rebrand RadioShack as a store that provides accessories for your core devices like portable speakers for your smartphone. According to today’s press announcement about the store closures, the one bright spot in the Q4 report was strong performance at these new concept stores. Hypothetically, RadioShack could open new concept stores withing the vicinity of the stores being closed this year, but it’s likely that current employees would still need to locate new jobs during the interim.
According to analyst David Schick, RadioShack has lost the edge of being a convenient shopping location due to the rise in online shopping. In addition, Schick believes that the company is extremely dependent on wireless smartphones and revenue generated off the upgrade cycle. However, since fewer consumers are upgrading their phones every year or two, revenue at RadioShack has declined dramatically.
- Toys Were Us? Toys R Us reportedly closing all 800 U.S. stores
- Tesla continues burning through cash, but sticks to production goals
- AMD and Nvidia report strong revenue amid still sky-high GPU pricing
- Best Buy to close down all 250 of its U.S. mobile phone stores
- Apple beats revenue forecast in first quarter, but iPhone sales took a hit