monster beats headphones review Revamped stores part of new CEO’s transformation of RadioShack
NEW YORK (AP) RadioShack’s new CEO, Joe Magnacca, has big plans to enhance the company’s image.
The stores will carry fewer overall items but have a broader array of trendier products like the popular Beats by Dre headphones and digital fitness gadgets. They will have such features as hands on tablet displays and a speaker wall to let customers compare speakers.
And drawing on his background as an executive at drugstore chain Walgreens, Magnacca said the company moved impulse purchase items like earbuds, magazines and $9.99 Hex Bug toys from wall shelves to near the cash register.
Locations that are not remodeled will adopt some of the concept stores’ remerchandising changes, such as displaying phones by manufacturer, like Apple or Samsung, rather than at tables in the front of the store organized by service carrier.
“I want to be the store that people go to and say, ‘I want to go to RadioShack and see what’s new and exciting,’ ” Magnacca said during a recent tour of RadioShack’s new New York concept store. “Key for us is how do we make the stores shoppable, and not overwhelm the customer.”
Magnacca replaced CEO James Gooch after Gooch had the job for only a year and a half. One key change he is implementing is cutting down on such past peak electronics as home phones, GPS devices and even VHS tape rewinders.
“We used to be known as a company that holds onto products until the very end of their life cycle,” Magnacca said. Now, those products will be reduced in stores and offered online or not at all.
RadioShack has tried to reinvent itself before. In 2009, RadioShack rebranded as the more informal “The Shack,” but that marketing effort did not bear much fruit. In 2011, the company shifted gears to focus on hot smartphones and wireless plans over other gadgets, but those lower margin products ended up hurting profit more than helping sales.
Revenue fell 3 percent in 2013 and 7 percent in its most recent January to March quarter. Revenue in stores open at least one year declined 5.7 percent this quarter from a year ago. That is a troubling sign for any retailer as the measurement removes the volatility of results from stores that were recently opened or closed throughout the year. It provides a peek at the overall health of a brand.
RadioShack also is facing investor fears about its liquidity. They sent shares down sharply one day last week on a website report that the company was meeting with advisers because it was having liquidity trouble.
To reassure investors, the company issued a statement saying that it had $820 million in liquidity at the end of the first quarter and was meeting with advisers only to look at ways to strengthen its balance sheet.
Wedbush analyst Michael Pachter said the new steps are “promising,” but RadioShack “may run out of time.”
“We expect the company to have difficulty refinancing its debt, and expect cash burn to continue for the next several quarters, while its new initiatives are likely to require ever higher levels of working capital,” he said in a note to investors last week.
A clearer picture of how the early days of the restaging of the 92 year old company is going will appear when RadioShack reports second quarter results Tuesday.
Analysts expect RadioShack to report a loss of 25 cents per share on revenue of $814.7 million, according to FactSet. In the prior year quarter, RadioShack reported a loss of 21 cents per share on revenue of $953.2 million.