RadioShack to Close 400 to 700 Stores
RadioShack Corp. will close 400 to 700 stores as part of its plan to turn around slow sales growth.
The retailer plans to expand its kiosk business and shift full-size stores to better real estate as part of its 18-month plan. RadioShack also will dump slow-moving products to stock more quick-turnover items in high-growth categories. (RadioShack also will close distribution centers in Charleston, SC and Southhaven, MS.)
It’s unclear whether RadioShack will boost marketing spending, estimated at $300 million to $350 million.
Fort Worth, TX-based RadioShack has been dogged by poor sales, especially in wireless communications. The retailer last month began selling Cingular Wireless products and services in 5,000 stores, first work in a 10-year distribution deal that RadioShack and Cingular Wireless signed in July. RadioShack cut a similar, 11-year deal with Sprint PCS in July, replacing its partnership with Verizon Wireless. Cingular Wireless and Sprint PCS are working with RadioShack to expand sales outside its flagship stores.
RadioShack’s Same-store sales rose only 1% for fiscal 2005; total sales rose 5% to $5.08 billion. Same-store sales were up 4% for the fourth quarter, with total sales up 5% to $1.67 billion for the quarter.
The store closings and merchandise revamp follow earlier measures to bolster sales, including the long-term wireless deals and a boost in advertising, with Arnold Worldwide picked in April as agency of record on RadioShack’s $250 million advertising account, its first outside agency. Arnold Brand Promotions handled RadioShack’s fourth-quarter mall tour tied to its “Red Chair” ad campaign (Xtra Nov. 30).
In May, RadioShack veteran David Edmondson was promoted to president-CEO from his previous post as COO, replacing CEO Leonard Roberts, who became executive chairman.
“We believe that the company’s strategy is sound. But we must move at a much faster pace with a greater sense of urgency,” Edmondson said in a statement last week. “The poor fourth quarter performance caused us to take a much deeper look at the state of our business and resulted in the launch of a turnaround plan.”
