February 19, 2006

Will A Radio Shack Close Near You?

For many of you, Radio Shack has been, a "nerd's store". For others Radio Shack was where you got your first cordless phone and maybe a remote control race car for the kids at Christmas.

As a gadget guy, I've visited Radio Shack many times to pick up telephone wires, speaker wires, speakers, screw drivers and several other things that only a gadget guy could love.

Sadly, Radio Shack will close 700 of its stores and start to not sell slow moving products and concentrate on products that sell faster. You might go into Radio Shack one day, looking for someone that no one else is selling, but not find it. I guess you could find it online though.

Reuters writes As for the quarterly results, Edmondson said sales were "good" in low-margin nonwireless categories like MP3 players, but were weak in high-margin categories, like batteries. Sales of wireless products, a key profit driver, were below targets.

Last year, RadioShack said it would switch phone carrier partners to try to revive its wireless sales. It agreed to sell Cingular Wireless phones and cut ties with long-time ally Verizon Wireless. It also signed a new 11-year deal with Sprint Nextel Corp. (S.N: Quote, Profile, Research).

But the transition, which took place at the end of the year, turned out to be more difficult than expected.

On Friday, RadioShack said it took an inventory write-down of $62 million in the quarter, and it is replacing old, slower-moving merchandise like speaker wire and outdoor antennas with new, faster-moving items

"Our business model for many years has been based on high- margin, slow-moving products," Edmondson said during an investor presentation. "These products are taking up valuable space in the store that can be much more efficiently utilized."

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