What's So Special About RadioShack? - Barron's

RadioShack (RSH) shares are up 57% in six weeks, but Barron's Kopin Tan thinks the jump is without justification.

RadioShack's same-store sales rebounded to 6.9%, helping beat Q2 estimates, but sales were helped by stimulus checks whose effects have largely worn off.

There was some speculation RadioShack might begin selling Apple's (APPL) 3G iPhones, but Best Buy (BBY) nabbed the coveted spot as first retailer of the popular devices. CEO Julian Day has cut costs and the wireless business has improved. Still, unless consumer demand starts to turn around and RadioShack starts to experience the popularity it once had, the jump in stock price might be unsustainable.

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The Fed's Beige Book noted electronics items were one of the top rebate check beneficiaries. Now that they're used up, recent outperformance may quickly evaporate.

Comments

[ksmithdc:]

A lot of things jump without justification. Oil, anyone? :)

2008 Aug 24 11:03 AM

[moneysurf:]

Thanks for this info!

2008 Aug 24 12:28 PM

[David Allen:]

The last time I was in a Radio Shack store was 5 years or so ago. My wife and I went there because she wanted a calculator, like my handy dandy Radio Shack Calculator, that requires no batteries.
"We don't have them anymore," sayeth the clerk. "Well, what do you have?" He showed me a calculator that required batteries. $20 or thereabouts. ok, I said, I'll take it. He proceeds to take out the batteries. "What the hell are yhou doing?" "The calculator doesn't come with batteries. They are extra." We went across the street to Fred Meyer and bought a Texas Instrument Calculator that requires NO batteries. COST: $8.95 PLUS TAX . . .Less than $10 total.

2008 Aug 24 12:47 PM

[mollytjm:]

most radio shacks around the philly area are in malls and they cater to people who want help with ordinary things...like replacing their hearing aid batteries or setting up a cell phone account. seniors have learned that if you buy it at radio shack, they'll help if you have a problem, or just do it for you.

and..if you want to do a 'get around'...they'll help with that too. they were the first chain to offer and help with ways to have your own phone and hook ups...or how to split your cable so you still only pay for one, etc.

they never really left the 'do what you can for the customer' model and it paid off and as tech gets more complicated, it'll keep paying off as long as they stick with the model.

2008 Aug 24 01:18 PM

[beabaggage:]

Similar experience at local radio shack few weeks ago. 12 noon, local strip mall with very busy grocery store, parking lot full, wealthier suburban Pittsburgh area, Starbucks, a Bank in there etc. Needed blank CDs so after grocery shopping went into RSH. Manager doing reports or something at the counter -looked up, no hello, went back to reports. Young clerk comes out, can I help you, said best value is these CD's on sale. It was a good price.
No attempt to sell anything else, did I need batteries? Have I seen the latest gadget type thing? etc. Pleasant enough but I left an already empty store at a busy time with a $7 purchase.
So long story already too long-- it is" sales" people?!? Specialty stores need good sales people!
RSH- train your staff for customer focus, I can get "waited on" at Best Buy etc!

2008 Aug 24 01:21 PM

[beabaggage:]

(FYI I meant similar experience to Mr. Allen as above. No sales accumen by staff!)

2008 Aug 24 01:22 PM

[Urbane Gori...:]

I gave up shopping RatShack when they kept insisting that I give them my mailing address prior to buying anything there.... Just what I need, slow sales staff, overpriced products and more catalogs in my mailbox. The only place I still really see their stores are in captive market areas - Normally adjacent to KMarts ... There's a plus!

jegan ;-)

2008 Aug 24 03:30 PM

[ohm:]

Having been in electronics for the last 50 years if I have to go into a Radio Shack I always remain searching for the item long after the clerk says they don't have it. I usually find what I need. I'm amazed they can stay in business with the people they hire, even the owners don't have a clue!

2008 Aug 24 04:47 PM

[mollytjm:]

here's where the senior citizens have it over on the rest of us...they don't go during any busy times. they lunch at 11, so go before that. and they go on a weekday.
i'm not justifying poor service, but i've been in 3 of the mall R.S's close to me and by and large, the service was genial and they knew the products they sold. their long term full time staff is pretty good...the temporary hires, usually teens, are sometimes there to steal the stuff (an entire group was jailed at one of the places here) but obviously if you're a tech wiz, you'll be working at the Apple Store or in industry.
but with an aging population, having a small store, that seems safe and familiar, in the mall, will still make R.S. a choice for certain people and i think they'll survive on that.

2008 Aug 24 04:47 PM

[brewer:]

Radio shack is mostly a toy store these days. Many things, stereo equipment, for example, have always been overpriced in their stores.

2008 Aug 24 10:23 PM

[Medici:]

The name says it all...."Shack"

2008 Aug 25 08:23 AM

[Pfloyd234:]

Who shops there anymore? They are still in Business? They are actually profitable!!!!

2008 Aug 25 10:40 AM

[Leonard the...:]

RSH is one of my favorite retail shorts here with a stop just above 20 it's an easy trade setup.

I have no complaints about my local RSH's but I don't see how they can fend off the competition with their current operations.

2008 Aug 25 10:52 AM

[FANNIE ANNIE:]

I've been unhappy with Radio Shack for along time now, they used to be the customer service place, but now all they worry about is their paper work, like the commenter said before, the mgmt is too busy to paper work they can't properly train the employees, thus they cant help, then on top of all of the none help, I understand that that are pushing the "older" employees/mgmt out the door, so they can hire the less expensive--18-21 yr olds to run the business---- in the ground, I suspect soon enough

2008 Aug 26 03:10 PM

[John C. Lee:]

They'll be lucky to even have batteries in stock.

Expect a pullback to the 200-day MA near $16 for the short-term. The price-volume divergence says it all.

2008 Aug 27 12:38 AM

[tandy rolli...:]

They just let go a 27 year veteran manager because he PERSONALLY didn't sell enough cell phones. I guess the managers do deserve overtime if they are sales people again. Ironically he won "Leaders Club" honors for all of last year. Great mgmt decision.

2008 Aug 27 03:59 PM

[RS SM:]

pay peanuts get monkies. Only one in 5 associate at any store know product, the rest are there to merchandise, ,amtain oprestions driven from the top down. and the big bad DM's come around and scream and threaten untill the process is implamented, as well as the monkies can, then is told to loos a monkey and find another, Half the stafffing porblem is any sales person working for the nickels and dimes will ultimately grab for the dollars and then they will be gone. But that's the past, this jump is from a new tech roolout DTV that RS is prime to accomplish. THere is a RS within 5 minutes of 90% of the population. When you want something rolled out to everyone in a hurry RS is the place to do it... THat's strong and valuable, Just think if Motorola wanted Everyone to have something all at once, RS is the partner of choice, And imagine if the irectors hired a vetern team of people that lean companies down Julian and his 5 reginal sales manager just put in place, then the new CFO to meld the investors into the frenzy she did for CVS and getting top dollar for the sellout. If profits come in up and growth continues thru the depth of DTV RS will be up for gtabs (again) and could be starting the bidding at a 30+ base. The recent rumblings of classing RS nutural, watch, accumulate are to gaurded, Jump in now and deep and you well see a big up side even after the lines fade and only one winner takes it all. It may be RS again, or a bigger hiolding co but eather wat RS and I will be far better off, I'm over 55% and still climbing it could be sen a mile away if you were watching the managment, profit, growth formula he has used before. it will hit 30 by 10/30 lag and slam up against 45 as it fights off the christmas naysayers DV won't be full force till 2/09 deep into the 1st q adn still rising. THen come out the suitors and this board has no loyality to this brand and the brand will have proved it's prowess. The Shack a wholly owned subsidiry of GE hmmmm? probably get $76 a share

2008 Sep 03 06:33 AM

[Opportunist:]

RS SM: Thanks, on a week like this we all need a good laugh. that was the best!!!

Oh wait, were you actually serious?

2008 Sep 21 07:10 PM