RadioShack may have had an ingenious Super Bowl commercial, but the struggling electronics chain announced Tuesday that its sales tumbled during the holidays. As a result, the company is set to shutter 20 percent of its current locations.
The company said that it will close 1,100 underperforming stores across the U.S. Its fourth quarter net loss reached $191.4 million. By comparison, during the same period last year saw a $63.3 million net loss. Overall in 2013, the company’s net loss was $400 million, much larger than 2012’s $139 million loss. According to The New York Times, the numbers were even worse than analysts’ predictions.
CEO Joe Magnacca took over in February 2013 and had hoped to oversee a turnaround at the company, but it has not happened yet. He blamed lower traffic in stores, discounts by rivals and lower-than-expected demand for new cell phones.
“Mr. Magnacca and the new team deserve a lot of credit for the changes they are making, but it seems harder and harder for them to overcome the more significant obstacles,” Janney Capital Markets analyst David Strasser told Reuters. Strasser even compared today’s press release to Circuit City’s last reports before it went bankrupt in 2008.
Analysts blame RadioShack’s inability to become a destination for younger consumers for cell phones. The company’s stock dropped 18 percent before the market opened this morning.
image courtesy of Wikimedia Commons
