Can RadioShack Be Saved?

PHOTO: Pedestrians pass in front of a RadioShack Corp. store in New York on March 2, 2014.Craig Warga/Bloomberg via Getty Images
Pedestrians pass in front of a RadioShack Corp. store in New York on March 2, 2014.

RadioShack announced today it will close up to 1,100 underperforming stores. The news came as part of the company's release of its fourth-quarter results for 2013, which included a loss of $191.4 million on sales of $935.4 million, down sharply from sales last year of more than $1.171 billion.

Same-store sales dropped 19 percent, which management attributed to reduced traffic. By late afternoon, RadioShack stock was trading at $2.26, down 17 percent.

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CEO Joseph Magnacca, in a statement accompanying the results, said that even with the announced closings, RadioShack would still have more than 4,000 stores, including more than 900 dealer-franchise locations. "Without minimizing the challenges ahead," he said, "We have a detailed strategic path to profitability."

He noted sales were up at the company's new Concept Stores, designed, in the company's words, to attract "tech-hungry shoppers" and to give them a new environment "that makes the buying experience fun."

"We have also been encouraged by the positive response to our new brand positioning around 'Do It Together,' which we kicked off with our award-winning Super Bowl commercial," Magnacca said.

Pessimists read the fourth-quarter results as a preview of the company's demise. Optimists held out hope management could still turn things around.

In a note to clients today, David Schick, an analyst with Stifel Financial Corp. in Baltimore, acknowledged that the company's strategic initiatives would need both time and money to succeed. Still, he wrote, "closing stores is a positive," and lower store sales could be offset with higher online sales.

Analyst Anthony Chukumba of BB&T Capital Markets did not share Schick's optimism.

Chukumba, asked by ABC News how RadioShack might turn things around, said, "Your guess is as good as mine. These numbers are much worse than we expected."

It's true that the holiday season was tough for retailers in general, Chukumba said. "We heard the same from Best Buy and others." But RadioShack's performance was so bad that "it raises serious doubts about their long-term viability," he said.

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However, the company's new Concept Stores "are interesting -- better than the legacy stores," he conceded. "But they haven't opened that many of them. And it's not clear they have the financing or the wherewithal to do so."

In the meantime, the company faces increased competition from Amazon, Walmart and a re-invigorated Best Buy, Chukumba noted. Exacerbating the Shack's troubles, he said, is a weak product cycle: "There just aren't enough new, whiz-bang products."

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He said he doesn't expect RadioShack to file for bankruptcy in the next 12 months. "But can it be turned around? That's unclear," he said, noting there is no silver bullet for what ails it. "A clever Super Bowl ad is not a silver bullet."