RadioShack, Left For Dead, Dies
June 12, 2012 by Douglas A. McIntyre
RadioShack (NYSE: RSH), at 90 years old, operates in over 7,200 locations. Even with those advantages, the company might as well fold. The company stands as a fine example of how better-run competitors and advances in retail channels can destroy an old-line bricks-and-mortar operation.
RadioShack shares dropped to $4.15 recently, a 52-week low, down from a period high of $16.25. Often debt pushes down market value when a public corporation has thin margins as RadioShack does. That is not the case here. RadioShack’s debt load is only $675 million, and the company has $566 million in cash and cash equivalents.
RadioShack’s deteriorating value is likely to accelerate. Sales are flat, based on Q1 revenue of $1 billion. The company lost $8 million in that period, compared with a $35 million profit a year ago.
It is nearly impossible to be behind the last person in line, but RadioShack has done that. Best Buy (NYSE: BBY) is as close as RadioShack will come to finding its assassin. And, Best Buy could hardly be in more trouble itself. It was pushed to its current state by Amazon.com (NASDAQ: AMZN), which has now been blamed for the collapse of every traditional retailer from JCPenney (NYSE: JCP) to Barnes & Noble (NYSE: BKS). The hard fact for these troubled retailers is that what the market believes about Amazon is true. It has single-handedly ruined the huge portion of the retail industry that is not either mega-chain discounters like Walmart (NYSE: WMT) and Target (NYSE: TGT) or high-end operators like Tiffany (NYSE: TIF) or Coach (NYSE: COH).
As a means to illustrate what Amazon has done to the retail market, and how hopeless RadioShack’s case is, the world’s largest e-commerce company has a market cap of $100 billion, which is more than Macy’s (NYSE: M), JCPenney, Nordstrom (NYSE: JWN), Gap (NYSE: GPS), Abercrombie & Fitch (NYSE: ANF), Costco (NASDAQ: COST), Dillard’s (NYSE: DDS), Barnes & Noble and Sears Holdings (NASDAQ: SHLD) combined.
RadioShack’s market cap is $400 million.
Douglas A. McIntyre
Take This Retirement Quiz To Get Matched With An Advisor Now (Sponsored)
Are you ready for retirement? Planning for retirement can be overwhelming, that’s why it could be a good idea to speak to a fiduciary financial advisor about your goals today.
Start by taking this retirement quiz right here from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes. Smart Asset is now matching over 50,000 people a month.
Click here now to get started.