Life Imitates The Onion

Five years ago, The Onion reported:

Even CEO Can’t Figure Out How RadioShack Still In Business

Despite having been on the job for nine months, RadioShack CEO Julian Day said Monday that he still has “no idea” how the home electronics store manages to stay open.

“There must be some sort of business model that enables this company to make money, but I’ll be damned if I know what it is,” Day said. “You wouldn’t think that people still buy enough strobe lights and extension cords to support an entire nationwide chain, but I guess they must, or I wouldn’t have this desk to sit behind all day.”

The retail outlet boasts more than 6,000 locations in the United States, and is known best for its wall-sized displays of obscure-looking analog electronics components and its notoriously desperate, high-pressure sales staff. Nevertheless, it ranks as a Fortune 500 company, with gross revenues of over $4.5 billion and fiscal quarter earnings averaging tens of millions of dollars.

“Have you even been inside of a RadioShack recently?” Day asked. “Just walking into the place makes you feel vaguely depressed and alienated. Maybe our customers are at the mall anyway and don’t feel like driving to Best Buy? I suppose that’s possible, but still, it’s just…weird.”

Reality is finally catching up to Radio Shack ($RSH). In December 1999, the stock was close to $80. This morning, it gapped down to $2. The company just reported another terrible quarter:

RadioShack reported a larger-than-expected loss for its third quarter as the electronics retailer’s revenue slipped.

The struggling company has seen its profits erode over the past two years and in September it announced the departure of CEO James Gooch. The chain’s troubles are partly due to wider problems in the brick-and-mortar electronics industry and add fuel to the notion that selling consumer electronics in brick-and-mortar stores is becoming less and less viable.

Interim CEO Dorvin Lively said that RadioShack had raised $175 million in new financing during the quarter and used those proceeds and some available cash to repay some debt.

After falling in premarket trading, RadioShack shares rose 10 cents, or 4.2 percent, to $2.49 in midday trading.

For the three months ended Sept. 30, RadioShack Corp. lost $47.1 million, or 47 cents per share. That compares with a net income of $300,000, or breakeven results, a year earlier.

I don’t see how the company can survive.

Posted by on October 23rd, 2012 at 12:53 pm


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