QUOTE(vjackson @ Aug 9 2006, 09:32 AM)
Somewhat offsubject: But anyone know how many employees work at RS headquarters?? We were discussing RS at work this morning. About 100 have been let go this past year, and more are very likely. Anyone have any opinions on what went wrong with Radioshack. Its competition like Best Buy and Circuit City are doing very well. RS's stock did shoot up some after it announced a new CEO, but most analyist are saying RS is going to have a tough time turning itself around. I'm going to try to find the article where some RS bigwig practically named a price for the company. I meant to post it, but never got around to it.
I guess this answers my question:
FORT WORTH -- RadioShack will cut 400 to 450 jobs starting next month, with the majority of the layoffs coming at its downtown Fort Worth headquarters, which currently employs just under 2,000 people, the company said Thursday.
The cuts will come at all levels, said Jim Fredericks, executive vice president for administration at the electronics retailer, which last month reported its first quarterly loss in nearly eight years. He said the move does not involve any outsourcing of work but instead "is eliminating activities, eliminating functions that do not support our store operations."
Affected employees will be notified by early September, the company said.
Word of the cuts comes less than three weeks after Julian Day started work July 24 as the company's new chief executive.
After 18 months of declining profits and stock price, the company is in the middle of a turnaround plan, launched in February under Day's predecessor, to reduce costs and boost sales and profits through the addition of new merchandise.
Based on Day's track record at Kmart, Sears and Safeway, investment analysts had predicted that he might institute tougher cost-cutting measures than the original turnaround plan sought.
But they also said they wanted to see Day reinvigorate the RadioShack brand, capitalizing on the chain's thousands of locations nationwide to bring customers back into stores with new merchandising.
So far the company has closed 480 underperforming stores, consolidated two distribution centers and closed or sold five repair centers. Those moves have eliminated about 650 jobs, according to the company.
RadioShack's total employment, including workers in its remaining 4,500 company-owned stores, is about 40,000, spokeswoman Kay Jackson said. That does not count workers at an additional 1,500 RadioShack stores that franchisees own and operate.
"This announcement is not a surprise in the sense that one would expect it, given RadioShack's finances," said Richard Weinhart, who follows the company for BMO Capital Markets.
He said he would anticipate similar moves in the future.
"We can't say this is the end of it," Fredericks said.
The company recognizes that it must get its costs in line with its revenues, he said, but he declined to speculate on whether further job cuts are planned.
Since the end of 2000, when the company reported 4,529 Tarrant County employees, RadioShack's local employment has fallen by more than 1,000, not counting Thursday's announced cuts. Some of those lost positions represent workers in operations that have been sold, but most were reductions, leaving the company with more than 3,000 Tarrant County employees.
Weinhart said that merchandise changes the company has detailed so far, such as dropping slow-moving items like keyboards and metal detectors and replacing them with items like flat-panel TVs and home computer networking gear, should boost sales.
But those items also face fierce competition from mass merchants, from Best Buy to Wal-Mart, and will carry lower profit margins, he said.
"Their entire business model is changing from a 50 percent gross profit margin to one in the low 40 percent range. That's a significant piece of your profit," he said, and it needs to be offset with lower overhead.
Fredericks said RadioShack's shift in merchandise is "not about introducing low-profit items. It's about introducing items consumers want."
In the past year, RadioShack has struggled to replace falling revenue from its wireless-phone business, which had grown to about one-third of sales. The company switched from selling Verizon phones and services to selling Cingular but faced inventory challenges that resulted in temporary shortages of some popular phone models.
RadioShack's share price (ticker: RSH), which is down 37 percent in the past year, rose 25 cents, or 1.5 percent, to $16.62 Thursday. Trading had closed before the company announced the layoffs.