RadioShack Reports Q4 Sales Fall, but Sticks By Pricey Super Bowl Ad

Retailer Announces Plans to Shutter 1,100 Stores

By Published on .

RadioShack's Super Bowl ad featured '80s icons.
RadioShack's Super Bowl ad featured '80s icons.

RadioShack may have won the Super Bowl, but it still has a long way to go in its turnaround effort.

CEO Joe Magnacca, who took over last year, has been trying to turn around the chain by changing the stores' format and stocking fewer items. RadioShack CMO Jennifer Warren, meanwhile, has been taking calculated risks with the brand's advertising. She's also led the consolidation of the brand's marketing with GSD&M, as well as brought some work in house to save money.

Still, the struggling electronics chain announced plans to shutter 1,100 stores today, as it reported falling sales and profits during the fourth quarter. The news comes on the heels of RadioShack's $4 million Super Bowl ad buy in the first quarter.

After years as the butt of other people's jokes, RadioShack took to adland's biggest stage to make fun of itself, opening with this line: "The '80s called: They want their store back." Developed on the recommendation of agency GSD&M late last year and never copy tested, the ad risked reinforcing the retailer's dated image. But it was really about announcing to as many people as fast as possible that RadioShack is remaking its stores, merchandise and image.

During a call with analyst, Mr. Magnacca noted that the ad generated consumer engagement and coverage "well beyond" expectations. He noted the ad, which introduced a new brand positioning -- good things happen when we do it together -- led to one of the largest media events in the company's history.

Jennifer Warren
Jennifer Warren

"My vision has to been to disrupt the consumers' view of RadioShack," Mr. Magnacca said. "The Super Bowl ad is only one ad, but it is the first component of a thoughtful marketing plan that will build upon the 'Do It Together' brand positioning. While it's early days and it will take some time to gain traction, we're very encouraged by the consumer response and the change underway in the conversation around our brand."

The plan to close underperforming stores, leaves the retailer with about 4,000 locations, including more than 900 dealer franchises, across the U.S.

RadioShack's "strategic initiatives will take time and expense," David Schick, an analyst with Stifel Financial Corp. in Baltimore, wrote in a note. Still, "closing stores is a positive," and the chain may be able to regain some sales online.

Sales fell 20% to $935.4 million during the fourth quarter, while the retailer's fourth-quarter net loss widened to $191.4 million, marking the eighth consecutive quarterly loss. Sales at stores open at least a year sank 19%.

--With contributions from Bloomberg News

Most Popular