[SFDXA] RadioShack To Update Brand

[Bill]

http://www.twice.com/articletype/news/radioshack-update-brand-assortment-stores/106235

RadioShack To Update Brand, Assortment, Stores
By Alan Wolf On Apr 23 2013 - 12:57pm


Fort Worth, Texas -- RadioShack plans to refresh its brand, assortment 
and stores to attract a new, younger customer and reverse a string of 
successive quarterly losses.

The strategy, which is still evolving, was outlined in broad strokes by 
recently installed CEO Joseph Magnacca during a first-quarter earnings 
call this morning, after the struggling chain announced a $43 million 
loss for the period.

Magnacca joined RadioShack in February from Walgreens and said he spent 
the ensuing weeks assessing the chain and solidifying its new management 
team.

He said the most immediate change will be a new branding campaign under 
the theme "Let's Play" that positions RadioShack as a neighborhood 
technology playground. The tagline will be highlighted in network TV 
spots, newspaper inserts and social and digital media, beginning with a 
new Beats commercial that airs next week.

Inside the store, expect to find a renewed focus on private-label brands 
and products, which differentiate RadioShack from its competitors and 
provide higher margins. Magnacca said his merchants are currently 
rationalizing the assortment and that the fruits of a recent product 
development foray in China will hit stores this summer.

The stores themselves will undergo a refresh, beginning in New York over 
the next several weeks. The remodeling program leverages the stores' 
existing fixtures and footprints to keep capital expenditures low, and 
will include more interactive demos and "power brand" displays that 
group products by brand rather than category.

By way of example, Magnacca noted that Apple products are presently 
dispersed throughout the store by product classification rather than 
presented in a central Apple area, making it more difficult for 
customers to find what they're looking for.

Sales staff will also be reinstructed to sell "the whole store" rather 
than aggressively focus on mobile phone sales, as they had previously 
been directed, which some customers found off-putting.

There are no plans for wholesale closures of stores, Magnacca noted, 
although redundant locations may be shuttered as leases expire. The 
chain shut 104 company-operated stores last year, but the new management 
team is considering using its over 4,000 locations as mini fulfillment 
centers for online orders as it moves to bolster multichannel sales.

Magnacca also said he met with key vendors who are "encouraged" by the 
initiatives.

Investors, who've similarly listened to a litany of strategic 
initiatives under six CEOs over the last eight years, may be giving the 
latest another chance, as RadioShack's share price rose nearly 5 percent 
to $3.29 after the earnings call.

In a research note, Janney retail analyst David Strasser blamed the 
chain's woes on "a long list of top management that sold out the long 
term for near term profits," and said that based on his remerchandising 
track record at Walgreens' New York-area drugstore chain Duane Reade, 
"listening and giving Mr. Magnacca the benefit of the doubt, here, could 
prove worthwhile."

Still, Strasser described the company's first quarter results as "a 
disaster by any stretch of the imagination," as losses widened to $43 
million from a year-ago net loss of $8 million. Chief financial officer 
and former interim CEO Dorvin Lively attributed the red ink largely to 
the company's postpaid mobile business. Handset unit volume fell 25 
percent year over year amid reduced promotional activity, constrained 
inventory on popular models and a dearth of "iconic" introductions, he 
said on the earnings call, while RadioShack's exit from its failed 
mobile department program for Target accounted for $8.5 million of the loss.

In contrast, prepaid mobile sales were up double-digit during the 
quarter as the addition of premium models helped remove any stigma from 
the category, and the wireless accessories and Bluetooth speaker 
categories also showed particular strength.

In contrast, CE, laptop and MP3 player sales were weak but enjoyed 
margin rate improvement, Lively said.