Management's Discussion and Analysis of Radio Shack Results $RSH
From the 10-Q:
Overall, our second quarter performance was challenged by a continued weak industry-wide consumer electronics environment and a soft mobility market. This was most prevalent in our mobility business which was negatively impacted by (1) low consumer interest in the current postpaid and prepaid handset offerings, (2) customers choosing to wait for new iconic handsets expected to be launched this fall, and (3) aggressive price competition on the current handset choices. In addition, the wireless carriers heavily promoted significant cash incentives for customers to switch to their networks which gravitated customers to the carrier’s retail store. Late last year, the carriers introduced new handset financing programs that were originally offered only in the carrier’s retail store. While we have since completed the process to offer these financing programs in RadioShack stores, they were only available for a portion of the second quarter and we are working to build awareness with our customers that we now offer them. The retail platform, the other half of our business, was also down for the quarter, but much less than the mobility business. Importantly, we saw an improvement in the trend of retail product categories as we moved through the quarter, which was driven by new offerings in our stores with new services including our Fix It Here program, new categories such as digital fitness and better inventory positions for these items.In a sense, Radio Shack went out of business years ago, but survived by pivoting to mobile phone sales and borrowing a lot of money. Now the mobile phone game has kind of come to an end - so much competition - and the interest on the borrowed money is tough to pay. (Let alone repaying that money rather than continually rolling the loans over.)
Sales in our mobil ity platform decreased 30.4 % to $ 309.7 million for the 13 weeks ended August 2, 2014 , when compared with $ 445.2 million for the 13 weeks ended August 3 , 2013. This sales decrease w as primarily driven by decreased sales in our postpaid wireless business due to intense wireless carrier promotional activities to motivate customers to switch networks , along with new device financing programs offered by the wireless carriers that were initially only available in the wireless carriers ’ stores. During the 13 weeks ended August 2, 2014 , we began offering the carrier financing programs. Comparable store sales in this platform decreased 29.8% for the 13 weeks ended August 2, 2014 , when compared with the comparable prior period .
Sales in our retail platform decreased 10.0 % to $ 298.1 million for the 13 weeks ended August 2, 2014 , compared with $ 331.1 million for the 13 weeks ended August 3, 2013 . Sales were negatively affected by decreased sales in many categori es including batteries , cordless phones , memory players, audio cables and AC adapters , which were partially positively offset by increased sales of music accessories, portable speakers and wellness products . Comparable store sales in this platform decreased 9.2% for the 13 weeks ended August 2, 2014 , when compared with the comparable prior period .
Interesting that the traditional Radio Shack electronics stuff - batteries, cordless phones, cables, adapters - aren't selling well either. I suppose that would be the Amazon competition that I always talk about.
The Beats speakers I think are kind of a fad - not something to build a business on. Overall, this quarter seems to reveal deep problems with the business model and product mix.
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