Thursday, April 17, 2014

Radio Shack Fun Facts $RSH

  • The Shack turns over inventory about 4.3 times per year. There's about $180,000 of inventory (cords and widgets?) per store. By comparison, Best Buy turns over inventory close to 8 times per year.
  • Best Buy sales are $300k/employee, Shack sales are $125k/employee. 
  • So, Shack takes almost twice as long and 2.4x as many employees to sell a dollar of inventory.
  • The Shack's gross margin is 34% versus Best Buy's 23%. However, Best Buy's SG&A is 20 cents per dollar of revenue and RSH's is 41 cents
  • I think these are both terrible businesses, by the way, that will be made extinct by Amazon, Walmart, and Target. However, Best Buy has no net debt and positive EBITDA. Best Buy will give a eulogy at the RSH funeral.
  • "hhgregg", a smaller Eastern retailer with less sales than the Shack is profitable (tiny margins) and turns its inventory 8x per year, with a gross margin of 29% that is almost as good as the Shack.
  • $10 million daily sales for RSH corp is only about $2,500 per store! You can probably be in the store manager hall of fame by selling $25,000 of product over a 3 day weekend. In other words, these stores are doing about $900k a year revenue. "Hhgregg" has sales per store of almost $11 million.
  • The Shack had a billion dollar market cap at the beginning of 2012! They paid 25 cents in dividends that year! They should have raised cash. Why is a company with no viable business model using debt financing?
  • "This proposed store closure program is expected to preserve liquidity by avoiding operating losses and generating cash by liquidating inventory in those stores. This will be partially offset by lease termination payments and liquidation costs."


theyenguy said...

Finviz chart shows it lost 31% of its value this week ...

Here in Bellingham, WA, there are two stores, one is in the General Growth Properties, GGP, Bellis Fair Mall, and the other is in a strip shopping center that has a 50s style diner, three fast food restaurants, a liquor store, a sun tan parlor, and a video store.

Steve Sailer said...

Reminds me of the Onion headline: "Hitler Discovered to Be Alive, Managing a Milwaukee Radio Shack Store"

Anonymous said...

If they don't raise any additional capital how much longer can they last? Through the summer?

Anonymous said...

Interesting to see Litespeed Management has a ~5% stake in the equity.

Any idea what they see here?

Anonymous said...

No idea. Position was reported in January when the stock was about 2x where it is now. She's down big on the position already. I don't know what she was thinking. Especially now that the bond is trading at 40 - how could you justify owning the stock?