When Joe Magnacca took over as CEO of RadioShack just over a year ago, the odds were against him getting the business turned around. With the announcement yesterday that RadioShack will close up to 1,100 stores — roughly 20 percent of its total — it's clear that Mr. Magnacca and company have a long way to go in accomplishing their goals.
"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," said Mr. Magnacca, in a statement, "Even in this environment, we're continuing to make progress on the five pillars of our turnaround plan: repositioning the brand, revamping the product assortment, reinvigorating the stores, operational efficiency and financial flexibility."
RadioShack's total net revenues for the latest quarter were $935.4 million, down from $1,171.4 million the year before. Comparable store sales were down 19 percent.
Mr. Magnacca explained the decision to close stores. "Our focus on the brand, our operations, and the in-store experience has been unfolding in parallel with a strategic review of our store footprint," he said. "Over the past few months, we have undertaken a comprehensive review of our portfolio from many angles — location, area demographics, lease life and financial performance — in order to consolidate our store base into fewer locations while maintaining a strong presence in each market."
The picture isn't all gloomy, said Mr. Magnacca. He pointed to new RadioShack Concept Stores, billed as electronics playgrounds for consumers, that have achieved positive sales growth. The company, he said, has also gotten high marks for its "Do It Together" brand message that kicked off around the Super Bowl. Those steps along with key hires will help the chain get to where it needs to be.
Many, understandably, do not share the RadioShack CEO's positive outlook.
Analyst Michael Pachter at Wedbush Securities, told USA Today, "I think they won't be in business in a year. I think that they are doing everything right — they're just doing it 10 years too late."
What grade would you give Joe Magnacca for his first year as CEO of RadioShack?