Dallas, Texas 02/12/2014 (FINANCIALSTRENDS) – The $267 million market capped RadioShack Corporation (NYSE:RSH) announced in the second week of February that it would be shutting down close to 500 stores over the next couple of quarters in its attempt to reinvent its business. The shutdown is expected to reduce the electronic retailer’s stores by close to 10 percent and comes on the back of previously stated five pronged approach to regain investor and customer confidence. The revival strategy included a huge push on repositioning the brand, bringing in new product offerings, revitalize the store front, bring in operational efficiency by shutting down unviable stores and finally achieve financial flexibility by increasing its cash flow.
Over the past year and a half RadioShack Corporation (NYSE:RSH) has been seen steadily shedding market share to the likes of more nimbler and larger competition like, “ Amazon.com Inc. (AMZN), Best Buy Co., Inc. (BBY) and Conns Inc. (CONN)”. The Fort Worth, Tx based electronic products retailer, has also been at the receiving end of the change in customer buying patterns, which have been leaning towards online purchase of electronic products over the past few quarters. Industry watchers have gone to town, highlighting the rising trend of customers opting to shop for their smart phones and tablets over the internet, there by eating into the profits of traditional retailers who depend on in store sales.
The move by RadioShack Corporation (NYSE:RSH) can also be read as its attempt to cut losses by getting rid of those stores which had failed to generate profits over the past year. This weakness was highlighted during the 2013 3Q results announcement, in which the firm reported same store sales have gone down by 8.4 percent in company operated stores. The shutting down of 500 stores is expected to increase the cash flow, thereby helping the firm attain better than expected margins when it reports 4Q 2013 results on 24th February.