RadioShack Posts Loss for Q1, Goes Negative

RadioShack Posts Loss for Q1, Goes NegativeRadioShack Corporation (NYSE:RSH) reported its 1st quarter earnings for 2012 today and needless to say it was not good.  The company reported a loss of $0.08 per share and revenue of $1.01 billion.  Analysts wanted a profit of $0.04 a share on revenue of $1.06 billion.

Unfortunately, this is yet another sign of a troubled electronic retail market.  Competitor, Best Buy Co., Inc. (NYSE:BBY), has also been in a downward spiral lately that has made people ask whether or not they will be able to survive.

Management told shareholders that 2012 was going to be “another challenging transition year” as the company announced they would be stepping up marketing campaigns and opening 50 new stores in Mexico this year to help stimulate some growth.

This earnings loss is just yet another sign that online retailers such as, Inc. (NASDAQ:AMZN) are continuing to draw traffic and sales away from retail corporations such as RadioShack and Best Buy.  This can be attributed to better deals online and gas prices.

How many times have you been in a store and realized that you could get that same exact item from a fraction of the price online?  Well that is why retail companies are suffering because Amazon and other online stores just offer a better deal, plain and simple.  As if that wasn’t enough, the high price of gas essentially counteracts the want to drive to a store and do shopping.  Consumers would rather pay the $3.99 shipping online and not leave the house.  Basically, it just makes sense to buy online if you are stretched for money and do not need the product right away.

RadioShack and Best Buy need to figure out how they can competitively lower prices without sacrificing underlying numbers too much so that they can drive traffic back into the stores.  Ultimately, that is the only way they are going to survive is if they offer deals that are more attractive than the deals the online stores are making.  If they fail to make the necessary changes, RadioShack and Best Buy could go the way of Circuit City within a year to two years.

The bottom line, high gas prices and better deals online are putting electronic retailers in a strangle hold.  The only way to get out of it is to step up advertisements and lower prices.  Unfortunately, these two can hurt underlying numbers but the alternative for these brands is not ideal.


Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted for being a sophisticated and loyal reader.

Sign up for ValueWalkPremium today and get our exclusive content for 35% off.

Use coupon code vip19 or click on the button below

Limited time offer only ENDS 12/31/2019 or after next 25 subscribers take advantage whichever comes first – please do not share this discount with others