Electronics retailer RadioShack is shuttering more store doors in light of poor revenue performance.
Total net sales and operating revenue for Q4 2013 was $935.4 million, a significant drop compared to $1.2 billion in Q4 2012. Same-store sales also dropped 19% year over year (YOY). RadioShack plans to level the loss by closing 1,100 stores, which will be selected based on location, area demographics, lease life and financial performance. Despite the store closures, RadioShack will continue to operate more than 4,000 brick-and-mortar stores across the U.S., including over 900 dealer franchise locations.
Although company officials noted strong sales growth in concept stores during the Q4 2013, poor foot traffic and aggressive pricing and promotions strategies all had a negative impact on financial results.
The electronics retailer also tried to gain momentum with an ad during Super Bowl 2014, featuring celebrities from the 1980s. In the ad, the store clerk answers the phone then says: “The 80’s called. They want their store back.” After characters including Alf and Hulk Hogan empty the store, viewers hear the tagline: “It’s time for a new RadioShack.” While clever, the ad did not boost sales and the brand image quick enough to save the struggling stores.
Joseph C. Magnacca, CEO of RadioShack, said: “Our fourth quarter financial results were driven by a holiday season characterized by lower store traffic, intense promotional activity particularly in consumer electronics, a very soft mobility marketplace and a few operational issues.”
Lackluster performance was a consistent trend for RadioShack throughout 2013. Total net sales and operating revenue for the fiscal year were $3.43 billion, versus $3.83 billion in FY 2012. Same-store sales revenue fell 8.8% YOY.
In an effort to jumpstart performance and boost customer sentiment, RadioShack will be focusing on five pillars of a turnaround plan, according to Magnacca: Repositioning the brand, revamping the product assortment, reinvigorating the stores, operational efficiency and financial flexibility.