RadioShack Updates Latest Store Closure Plan
Retailer Now Plans To Close 200 Stores per Year over Next 3 Years
June 11, 2014
Stymied by an impasse with its lenders over its plan to close up to 1,100 stores this year as part of a restructuring plan, electronics retailer RadioShack has scaled back the plan to now close 200 stores per year over the next three years.
“The net result will be that we can achieve a good portion of our objective just over a longer timeframe,” said John Feray, executive vice president and CFO of RadioShack.
The Fort Worth-based retailer could not find mutually agreeable terms to obtain consent from its lenders necessary to proceed with a more aggressive closure program. However, the company said it continues to have “good dialogue on this topic.”
RadioShack said it is also working with its landlords to find an efficient and cost effective means to reduce rent expense. It has enlisted A&G Realty to assist in that effort.
The company has yet to give much information about which stores may be impacted when by the new plan.
“Going back to April, we looked at that 1,100 hundred stores maybe a little differently than perhaps you might have from your view,” Joe Magnacca, CEO of the company told analysts. “we looked at it from a location basis, from a store profitability basis, from a duplication of store perspective, and we got that number based on those criteria.”
Were it to have closed 1,100 stores, it would have left RadioShack with 3,000 domestic stores.
Regarding its remaining stores, Magnacca said the company was trying to take “a much more strategic view of our real estate and getting to a place sooner than later.”
RadioShack reported this week that its first quarter performance was challenged by an industry-wide decline in consumer electronics and a soft mobility market which impacted traffic trends throughout the quarter.
Total net sales and operating revenues were $736.7 million, compared to $848.4 million last year. Comparable store sales were down 14% driven by traffic declines and soft performance in the mobility business.
“We are also successfully reducing our costs, with a particular focus on removing expenses that do not impact the customer experience, and have taken steps to lower our corporate headcount, leverage technology, and reduce discretionary expenses. Our entire team is focused on executing our vision, adapting to the environment, managing our balance sheet, and driving sustainable change,” Magnacca said.