Amid an effort to dust off its image in the age of iPhones and tablets, RadioShack Corp. (NYSE:RSH) said Tuesday that it will close up to 1,100 underperforming U.S. stores, or about 20 percent of its locations. The company did not disclose the stores to be shuttered, nor did it say how many of its roughly 27,500 sales employees would be affected. A request for more information was not immediately returned. Updates will be posted here.
Ironically, the Fort Worth, Texas, electronics retailer had been riding a wave of positive buzz from a recent viral Super Bowl commercial in which a gang of Reagan-era characters -- including Alf, Cliff Clavin, Hulk Hogan and others -- are seen raiding and pillaging a 1980s-style RadioShack location. The spot concludes at a modern-day store complete with a redesign and logo the company unveiled last year. The effect poked fun at widely held notions of RadioShack’s struggle to adapt to the 21st century while attempting to convey that a new era for the company has arrived.
Dripping with nostalgic references, the commercial was wildly popular on social media, trending on Twitter during the big game and attracting almost 3 million YouTube views since. But pop-culture savvy and chirpy self-awareness don’t move merchandise. In its fourth-quarter earnings report Tuesday, RadioShack posted a 19 percent drop in store sales compared to the same period last year. Net sales and operating revenue for the year were $3.43 billion, down 8.8 percent from the $3.83 billion reported last year.
The dichotomy between the optimistic commercial spot and Tuesday’s grim announcement did not go unnoticed by commentators on Twitter.
So @radioshack is closing 1000+ stores. I guess when the 80s called nobody picked up.
â€” Navid Mexico (@navidsworld) March 4, 2014
Wow. @RadioShack is closing 1100 stores? What happened to that whole rebranding thing?
â€” ThrillGeek (@thrillgeek) March 4, 2014
â€” Hanah Cho (@hanahcho) March 4, 2014
In a statement, a hopeful Joseph C. Magnacca, RadioShack’s chief executive, said the company’s “brand equity” is still strong, but the company is following a five-point plan to achieve profitability. He added that the company has seen strong sales growth in the newly redesigned concept stores. “Our entire team is focused on execution as we work to improve our performance in the coming year,” he said.
The proposed closures are being chosen based on location, area demographics, lease life and financial performance. Shares of RadioShack were down 14 percent to $2.34 in midday trading.
Watch the Super Bowl commercial below.