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Radio Shack, the electronics retail store, has announced it will be closing 1,100 stores across the country. The move comes after a reported loss of $400 million last year.
Just last month, Radio Shack launched a comedic ad campaign that premiered during the Super Bowl, announcing a redesign of the store.
The Wall Street Journal’s Jason Bellini joins Here & Now’s Jeremy Hobson to discuss the future of Radio Shack.
JEREMY HOBSON, HOST:
This is HERE AND NOW from NPR and WBUR Boston. I'm Jeremy Hobson.
Radio Shack said today it will be closing 1,100 of its stores. This comes just a month after the company's new ad campaign debuted during the Super Bowl touting a new modern decor in stores and a move away from their retro image of selling cables, cassette players and corded telephones.
(SOUNDBITE OF RADIO SHACK AD)
UNIDENTIFIED MAN #1: Radio Shack? OK.
UNIDENTIFIED MAN #2: What?
UNIDENTIFIED MAN #1: The '80s called. They want their store back.
HOBSON: Jason Bellini of The Wall Street Journal joins us now from New York with more on this. Jason, this ad campaign was just a month ago, as we said. But The Wall Street Journal did report after that, the Radio Shack was considering closing 500 stores. Now, the number is 1,100. Is this a sign that that campaign failed?
JASON BELLINI: Hey there, Jeremy. I refuse to believe that Alf and Hulk Hogan could be responsible of whether or not - having to close these stores. I mean, that ad was actually one of the best that aired during the Super Bowl. I mean, but poking fun on its outdated image did - I don't think that it was really the reason. I mean, I think it really is about what happened during the holiday season, the reason why they're closing so many stores.
I mean, they're really closing a fifth of their total stores. They had this awful holiday season. And, you know, they're struggling right now to transform their image from this old-school electronics store into a destination for shoppers that are looking for entertainment gadgets - headphones, smartphone cases - that's where they see themselves making money.
HOBSON: But was it really just a bad holiday season, or is this just a trend that has gone on for a while? Eleven hundred stores is a lot of stores to close because of one bad holiday shopping season.
BELLINI: Well, no, I mean, it's been a long-term trend that they've been struggling in this very competitive electronics market. I mean, look, if you bought the stock back in 2010, 2011, and you paid around $24, you're not very happy right now because at my last check, it was around $2.70. And that doesn't happen overnight.
I mean, they've had this drop in shopper traffic as a result of, you know, all these deep promotions that they've had to make because of the high competition that they're in, and then really weak sales in the phone and tablets category. And that had typically made up about half of the chain sales. So they've had a lot of things that have been working against them and made it really difficult to turn it around.
HOBSON: Well, and this is something that its competitors have also seen. We, of course, know Circuit City went under right after the financial crisis. And Best Buy has had a lot of trouble, especially because people are going in, they're looking at the products at Best Buy. They're taking pictures of them with their phones. They're looking them up on Amazon, and then they just go buy them online. They're using these stores as showrooms. Is it the same issue for Radio Shack?
BELLINI: Well, you know, the number one electronics wholesale there is or retailer there is in this country?
HOBSON: I'm going to guess Amazon.
BELLINI: Correct. Yup. That's really impacting the bottom line. You know, at Best Buy, their chief financial officer just warned investors that they should expect sales to be slightly negative for the first half of this year, and that's coming off of really negative fourth quarter results during that holiday season that we just talked about.
Online sales is the only bright spot for their earnings, jumping 26 percent in the last quarter. You've got hhgregg. That retailer's also reporting weakness in electronics sales. It estimated its holiday sales fell 12 percent - pretty major.
HOBSON: So, Jason, in the few seconds we have left, what would you say is the future of Radio Shack?
BELLINI: Hard to say. I mean, some of the analysts are saying that it's going to be a real, real tough turnaround. You know, they've got a former Walgreens' executive as their CEO, and he managed to give that brand a face-lift with bright stores, and that's what he's trying at Radio Shack. But can they turn around? This company is - I mean, it's a 90-year-old company. It's really old. Rich tradition. But times are changing.
HOBSON: Jason Bellini of The Wall Street Journal. Jason, thanks as always.
BELLINI: Thank you.
HOBSON: This is HERE AND NOW. Transcript provided by NPR, Copyright NPR.