RadioShack

RadioShack Corporation

File:RadioShack.svg
Company type	NYSE: RSH
Industry	Retail
Founded	1921
Headquarters	Fort Worth, Texas, USA
Key people	Julian Day, Current CEO
Products	Electronics
Revenue	$2 24b (2006)
Number of employees	37500+
Website	www.RadioShack.com

The exterior of a typical free-standing RadioShack store.

File:Radioshackstore.jpg

The exterior of a RadioShack store in a shopping mall.

RadioShack Corporation (formerly Tandy Corporation) (NYSE: RSH)  is a chain of electronics retail stores in the United States, as well as parts of North America, Europe, Central America, South America and Africa. As of 2003, it has more than 6,000 stores in the USA and reported net sales and operating revenues of $2.24 billion. RadioShack briefly reopened stores in Canada after losing its former subsidiary InterTAN (independent since 1986) to a purchase by Circuit City in 2004. However, in December 2006, RadioShack Canada announced it would be closing its nine corporate stores to focus on strengthening its core business in the US. The head office of RadioShack is located in Fort Worth, Texas. RadioShack is also a sponsor for the Samsung/RadioShack 500 NASCAR Sprint Cup Series race at Texas Motor Speedway.

RadioShack's current proprietary brands besides RadioShack branded products include Accurian (audio and video equipment and accessories), Enercell (batteries and power accessories), Gigaware (personal computer accessories), Kronus (tools), MyMusix (MP3 players), Optimus (formerly audio and PA/DJ equipment, now used for digital cameras), Presidian (audio and video equipment, telephones, flashlights, calculators, and 2-way radios), VoiceStar (wireless phone accessories). Discontinued brands include Archer (wiring and antennas), Duofone (telephones & accessories), Micronta (scientific and educational equipment) and Realistic (sound equipment).

History

The first 40 years

The company was started as Radio Shack in 1921 in Boston, Massachusetts, by two brothers, Theodore and Milton Deutschmann who wanted to provide equipment for the cutting-edge field of amateur, or ham, radio. Theodore and Milton Deutschmann opened a one-store retail and mail-order operation in the heart of downtown Boston on Brattle Street, near the site of the Boston Massacre. They chose the name "Radio Shack," which was a term for the small, wooden structure that housed a ship's radio equipment. The Deutschmanns thought the name was appropriate for a store that would supply the needs of radio officers aboard ships, as well as "ham" radio operators.

The company issued its first catalog in the early 1940s and then entered the high-fidelity music market. In 1954, Radio Shack began selling its own private-label products under the brand name Realist, but was subsequently sued and consequently changed the brand name to Realistic. After expanding to nine stores plus an extensive mail-order business, the company fell on hard times in the 1960s. Radio Shack was essentially bankrupt, but Charles Tandy saw the potential of Radio Shack and retail consumer electronics and bought the company for $300,000.

Tandy Corporation

Main article: Tandy Corporation

File:Old radioshack logo.gif

Radio Shack's old logo, used from 1974 to 1995.

In 1963, Radio Shack was purchased by the Tandy Corporation, which was originally a leather goods corporation, and renamed Tandy Radio Shack & leather. Tandy eventually divested itself of its non-electronic product lines.

Tandy (through InterTAN) also operated a chain similar to RadioShack in the UK under the "Tandy" name from the 1970s until the late 1990s. The stores were sold to Carphone Warehouse in 1999, and over the next few years were converted to that format, or sold off.

Tandy entered the Australian market in 1973. In 2001 Woolworths Limited acquired the Australian operations and merged them with their Dick Smith Electronics business.

During the 1960s through the 1980s, Radio Shack marketed its free battery card; a wallet-sized cardboard card, free, which entitled the bearer to free batteries when presented at one of their stores. The bearer was limited to one a month, although many customers would frequent several stores with several cards every month. These cards also served as generic business cards for the salespeople in the 1980s; the "battery club" card was still used until the company-wide changes in the early 1990s.

In 1978, three years after the famous MITS Altair, Radio Shack introduced the TRS-80, one of the first mass-produced personal computers that became a big hit. This was followed by the TRS-80 Color Computer designed to attach to a television for use as a monitor. In the late 1980s, Radio Shack made the transition from its proprietary 8-bit computers to its proprietary IBM-PC-compatible Tandy computers; however, shrinking margins and a lack of economies of scale led Radio Shack to exit the computer-manufacturing market by the mid-1990s.

Radio Shack had another big hit with products designed to take advantage of the Family Radio Service, a short-range walkie-talkie system. Since the mid-1990s, the company has attempted to move into the consumer small components markets, focusing on marketing wireless phones.

In 1993, Len Roberts became president of Radio Shack. The move came as a radical career departure for Roberts, who spent more than 20 years in the food industry, beginning with Ralston-Purina, where he served in various management and marketing positions.

In early summer 1995, it was elected that the name "Radio Shack" would be spelled in CamelCase as "RadioShack", and a new logo would be launched.

RadioShack Corporation

RadioShack tape recorder

In May 2000, the company dropped the Tandy name altogether, instead opting for RadioShack contracted into one CamelCase word. The logo had been changed from the '70s-style bullethole lettering to the current stylized R in 1995.

Also in 2000, the company-owned Realistic and Optimus brands were discontinued when the company entered into an agreement to carry RCA products, although RadioShack hasn't made products under the Realistic name since the early 1990s. When the RCA contract ended in 2004, RadioShack added its own Presidian and Accurian brands, and then re-introduced the Optimus brand in 2005 on some low-end products. RadioShack still has its own brand of batteries, called Enercell.

A few RadioShack stores still carry products dating as far back as the 1980s. Older RadioShack products feature the old logo, or an older Realistic or Archer brand name. It is not uncommon to see a few generations of packaging variations on slower moving products.

Until 2002, RadioShack routinely asked for the name and address of customers who made purchases so they could be added to the mailing list. Name and mailing address information is requested when purchasing a service plan, RSU Part (RadioShack Unlimited - an instore ordering method for parts and accessories for select radioshack and other brand products), Direc2U item (ordering of a special product or not in stock product with free shipping), and returning an item. Name and mailing address information and identification is required to apply for a RadioShack Answers Plus credit card, activate a cellular phone (by the wireless carrier), or to pay with a check.

On December 20, 2005, RadioShack announced the sale of its newly built riverfront Ft. Worth headquarters building to German-based KanAm Grund. RadioShack will continue to lease the property for 20 years.

Charles Tandy also inspired the Tandy Kids, a duo of teen calculator enthusiasts who teamed up with the likes of Archie and Superman.

"Fix 1500" initiative

In a controversial and wide sweeping move, RadioShack in early 2004 introduced a program to "correct" inventory and profitability issues company wide called Fix 1500. District managers and administrators assessed the skill level of all store managers (5,000+ at the time) and put the 1,500 lowest-graded managers on notice. The strategy was revolutionary because employees were not included in the program because of parameters based on tangible store and personnel data. Instead, managers were selected by assessed skill deficiencies obtained in subjective one-on-one interviews between district and store management. What created more controversy was that the metrics of the skill deficiencies were graded in comparison to all other store managers, with a pre-determined number (1,500) of selections. Simply put, store managers were not selected for Fix 1500 based upon their own skill level, but in comparison to how the other 70% of store managers company wide were subjectively graded. [1]

Typically, a 90-day period would be established for the manager to improve his/her "grades" (thus causing another manager to then be selected for Fix 1500). As a result, a total of 1,734 store managers were reassigned as sales associates, or terminated, in a 6-month period. Also, during this period of time, RadioShack canceled the employee stock purchase plan. Although the stock price began to surge, by the first quarter of 2005, the metrics of skill assessment used during Fix 1500 had already been discarded, and the corporate officer who created the program had resigned.

By May 2005, RadioShack (RSH) stock fell over 30%, and the company offered to buy back shares from former employees and managers at a comparatively much lower price than the original purchase. This predictably decreased earnings per share (EPS), but improved overall volume at that time. Stock options for district and regional management however were never revoked.

CEO résumé scandal

On February 20, 2006, the company announced that its CEO, David Edmondson, had resigned over questions raised about his résumé. The Fort Worth Star-Telegram discovered that he had not earned degrees in theology and psychology from Heartland Baptist Bible College as claimed on his résumé. [2] RadioShack's board of directors stood up for Edmondson, but Edmondson admitted to the errors, calling them "misstatements", and resigned.[3]

In wake of Edmondson's absence Claire Babrowski acted as CEO, chief operating officer and president for RadioShack. She had just joined several months prior, after spending 31 years employed with McDonald's Corporation, most recently as a vice president and Chief Restaurant Operations Officer. In August 2006, Claire Babrowski left RadioShack, later to become COO and Executive Vice President of Toys "R" Us.

Radio Shack paid David Edmondson a million plus severace package to assure he would keep his mouth quiet about improper pay for managers. Others envolved in this were Louis Provost. The lawsuit was settled out of court nationwide, with Radio Shack only paying 10.00 to most managers, as a part of the class action settlement. When in fact this company owed most managers well over 40,000.00 plus interest.

RadioShack had also admitted that 2005 fourth-quarter earnings had fallen 62 percent after a switch in wireless providers led to an inventory write-down. The news sent the company's shares to an almost three-year low.

On July 7, 2006, RadioShack's board of directors announced it had chosen Julian Day, 54, to serve as chairman and chief executive officer of the company. Day had previously served in senior leadership positions at several large publicly traded retailing companies in the U.S. and had played a key role in revitalizing such companies as Safeway, Sears and Kmart.

New strategy

RadioShack in the spring of 2006 announced a strategy to increase average unit volume, lower overhead costs, and grow profitable square footage. In early to mid 2006 Radio Shack closed nearly 500 locations. There were more than profits in mind when making this decision. In some areas Radio Shack would have literally a dozen locations in only a few square miles, sometimes a Radio Shack across the street from a Radio Shack. when there were stores this close to each other they would compete with one another, month to month one store would thrive while the other would die. Most of the stores closed in 2006 brought in less than $350,000 in revenue each year.

Corporate layoffs

Despite these actions, stock prices plummeted within what was otherwise a booming market. On August 10, 2006, RadioShack announced plans to reduce its workforce at company headquarters by approximately 400 to 450 positions across its various support functions. Company officials said this action was necessary to reduce the company’s overhead expense and improve its long-term competitive position in the marketplace while supporting a significantly smaller number of stores.

Most of RadioShack’s planned reductions occurred on August 28 at its headquarters operation in Fort Worth, Texas. Approximately 1 out of 5 positions were eliminated, and it affected employees at all levels of the company.

All employees at the corporate headquarters were informed of the impending cut 10 days in advance. As previously communicated to employees, an e-mail notification was sent on the published day and time to employees whose positions were terminated. They were given 30 minutes to finish packing up, say their goodbyes to co-workers and then attend a meeting with their senior supervisors. Afterward, a larger meeting with human resources allowed departing employees to obtain their benefits packages and ask questions. This move drew immediate widespread public criticism for its lack of sensitivity.

International operations

Operations in Canada

Pre-2005

File:Tsbcc-logo.jpg

The Canadian counterpart of RadioShack, also known as Radio Shack, was run by a company called InterTAN, acquired in 2004 by Circuit City. However, RadioShack sued InterTAN one week after the purchase, claiming InterTAN had breached the terms of their agreement. On March 24, 2005, a U.S. district court judge ruled in favor of RadioShack and cancelled their agreement, meaning that all 950 RadioShack stores in Canada must stop using the brand name in any of their products, packaging or advertising by June 30, 2005. As a result, all of the InterTAN stores were rebranded under the name The Source by Circuit City and RadioShack Corporation planned to open its own stores in Canada under the RadioShack name.

Post-2005

After preventing InterTAN from using the RadioShack trademark, RadioShack announced its intention to re-enter the Canadian market itself with a Canadian division. InterTAN pursued court action to prevent RadioShack from using the trademark in Canada until the original 2010 expiry date of the original licensing agreement. The company had planned to have 20 to 30 stores operating in Canada as RadioShack by the end of 2005, mostly in the Toronto area, but progress was slower than anticipated. As of September 2006, nine company-owned stores had been opened and 16 dealer stores were operating under the name RadioShack, signing new agreements with RadioShack Corporation.

In January 2007, RadioShack Corporation announced that it closed its nine company-owned stores in Canada in order for the company to refocus its attention and resources on strengthening its core business in the U.S. [4].

Operations in Australia

InterTAN Australia ran Tandy stores until 2002, when it was announced that Woolworths Limited would acquire them for AUD$114 million and merge them into their existing Dick Smith Electronics business. After the merger, Woolworths found Tandy to be in poor condition and has been trying to rejuvenate that part of the business since. Various Radioshack & Optimus branded stock continue to be sold exclusively in Tandy stores, but these are continuously being superseded by DSE branded stock.

Operations in France

InterTAN operated Tandy stores in France, selling standard RadioShack brands, Realistic, Optimus, and Archer. Sales people sometimes came from the French-speaking Canadian province of Québec. The French subsidiary went bankrupt and closed by the end of December 1993. Sales representatives blamed this on the practice of selling non-store brands (such as IBM laptops) with margins that were too low.

Operations in Belgium

Tandy stores were introduced in Belgium in the early 1970s. The opening of a Tandy store was usually accompanied by a publicity campaign where free 5-D cell flashlights were given away, with free batteries available through the Tandy battery card. Initially, the Tandy stores only sold their proprietary brands such as Realistic, Archer or Optimus. By the mid-1980s however many Tandy stores had closed and by 1990, Tandy had disappeared from the Belgian market. In the last years of operation, they also stocked mainstream brands, which made the stores lose a lot of their peculiar character.

As at 2007, one Tandy store remains open in Merksem, claiming to be the only remaining Tandy store in Europe.[5]

Other operations

Corporate citizenship

RadioShack's charity of choice is the National Center for Missing and Exploited Children, a nonprofit organization. The organization's store presence is the StreetSentz program, which is a child identification and educational kit readily available to families free of charge.

RadioShack's green initiative involves the Rechargeable Battery Recycling Corporation, in which end-of-life rechargeable batteries are dropped off in-store to be safely recycled. End-of-life wireless phones can also be recycled.

RadioShack and other retailer partnerships

In August 2001, RadioShack opened new kiosk-style stores inside Blockbuster outlets. The project ended in February 2002 when CEO Len Roberts announced that the stores did not meet expectations. A more successful venture for RadioShack has been the wireless kiosks the company has been operating since 2004 within Sam's Club discount warehouses. RadioShack purchased the kiosk operations from Arizona-based Wireless Retail Inc. Kiosk employees are contracted through RadioShack Corporation, and no RadioShack-branded merchandise is sold. The name Wireless Retail inc. has since been changed to SC Kiosks inc.

References in popular culture

• In a scene in the film Kung Pow: Enter the Fist, the Chosen One helps a wounded Master Lin down the street. Lin croaks, "Tell me... if you see... a Radio Shack."

• In the 2nd season of the ΝΒC sitcom Just Shoot Me, Jack Gallo insists Maya wears a "wire" when confronting a man accusing her of sexual harassment. He elaborates, "I have a friend in the CIA. He clued me in to this place called 'Radio Shack'."

• A Radio Shack figured prominently in the film The 40-Year-Old Virgin, being the place of work for most of the cast, as well as the titular character, Andy.

• On an episode of the CBC animated TV series Chilly Beach, a mad scientist claimed he purchased the power amplifier for his doomsday device at Radio Shack.

References

• Irvin, Farman (1992). Tandy's Money Machine : How Charles Tandy Built Radio Shack into the World's Largest Electronics Chain. Chicago: Mobium Press. ISBN 0-916371-12-3.

External links

• Official homepage of RadioShack
• Official homepage of RadioShack Canada
• Official history of RadioShack

• Business data for RadioShack Corporation:
  • SEC filings