Radio Shack (NYSE:RSH) has shown another CEO the door. Jim Gooch looked nice, with experience at Sears and Kmart, and even a degree from Northwestern's Kellogg School (go Wildcats), but he could not turn around the Shack or even keep it afloat.
This is not an unusual thing. Very few retailers are doing well. The mall model, the anchor tenant model, the big box model, they're all broken. Even the strip mall model, which Radio Shack used, is failing in the key area of merchandising.
Retailers just have no clue on how to compete in an Internet age.
It's not just Amazon.com (NASDAQ:AMZN). It's not just the growing number of online retailers, many of whom handle fulfillment through specialists like Yoox. While sites like Yelp (NYSE:YELP) have been helping restaurants, and Groupon (NASDAQ:GRPN) has been helping with clearances, there's just no daily help for mainline retailers.
You can see it by just driving down the road. A few brand names are making it, but more-and-more storefronts are empty, and how many barber shops or nail salons or dog grooming centers or yoga studios does your town really need? (Not another coffee bar!)
Many of the "category killer" stores of the 1990s are, in fact, being killed. Staples (NASDAQ:SPLS) is closing stores, just as Radio Shack is flailing, because electronics have become both simple and throw-away, and their margins have disappeared.
There are three ways in which this can go. I've previously suggested that it could seek out niches that are similar to the PCs of its 1970s heyday - like robotics or 3D printing - and become the sole solution in those areas. Or the current board could find a great merchandiser in its hunt for a Gooch successor, someone with new insights into how merchandise can move in the 2010s.
Or it can just go under. That's what usually happens in these cases. Avoid the stock, and if you're going to play the options, play the short ones.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.