RadioShack Revamps Its Website In Time To Cater To The Upcoming Holiday Season

Earlier this week, RadioShack (NYSE:RSH) relaunched its website (www.radioshack.com) with new features that help customers get great prices on all the latest technology. The redesign of RadioShack’s online stores comes just in time for the busy holiday season up ahead and RadioShack’s Cyber Week full of savings on must-have gifts. Being a prominent player in the electronics retail business for over 90 years, RadioShack has been struggling to survive in the industry with rising competition from online retail giants such as Amazon (NASDAQ:AMZN), online auction sites like eBay (NASDAQ:EBAY), as well as other physical retailers such as Best Buy (NYSE:BBY) and Wal-Mart (NYSE:WMT). In the last few years, RadioShack has been plagued by an eroding top line growth, declining gross margins, high inventory levels, a string of debt maturities and declining cash reserves. The company’s stock price has declined drastically in the last few years, from around $10 in 2010 to less than $1 at present.

Showrooming has negatively impacted the sales of traditional brick-and-mortar retailers such as RadioShack. This practice arises when customers use physical stores to check out products and gain hands-on experience with gadgets, but then use online stores to make purchases, often at lower prices.   Declining customer traffic in its stores has resulted in lower sales, which has forced the company to close up to 200 stores per year over the next three years.

While e-commerce has exploded in the past decade, RadioShack’s online sales have declined more than 20%. According to the E-commerce news site Internet Retailer, RadioShack had the third-largest decline in Web sales over the past decade. RadioShack outsourced its online business for many years, but has now shifted it in-house. Leveraging online sales is an important factor that can help drive future growth for brick-and-motor stores. RadioShack’s online sale account for less than 1% of its revenue. In comparison, Best Buy’s online sales account for about 7.5% of its total domestic revenue. Some other players generate an even higher proportion of their revenues from online sales. In 2013, Wal-Mart’s online sales amounted to $10 billion. Neiman Marcus and Saks Fifth Avenue online sales have exceeded 20% of their annual revenue. ((RadioShack’s online presence not clicking with customer, Dallasnews, March 24, 2014))

Reinvigorating its online platform can help RadioShack increase the proportion of revenue it earns from its online platform. With the latest update, the company has completely changed the look of RadioShack.com, with a shift to a clean, uncluttered site design that is organized more by interest, category, theme or seasonal topics. The site also features dynamic merchandising capabilities, enabling RadioShack to deliver quicker product and inventory updates. Additionally, the new RadioShack.com features real-time pricing functionality that allows the company to make quick price adjustments to meet and beat pricing comparisons with major online retailers as well as other brick-and-motor stores. If customers find a better price on the front page products, like Beats Solo HD headphones for $69.99, RadioShack prmoises to match the price and take an additional 10% off if the customer brings a competitor’s printed ad into the store.

RadioShack has lowered its prices on thousands of online items and hundreds of private-label items and its own AUVIO line of sound products. The company is also providing free shipping during the Black Friday weekend on all online orders. Additionally, they are offering plenty of early bird specials to lure shoppers to its stores for its all day Thanksgiving Day sale that will spill over into the weekend.

RadioShack has a long-way to go before its can transition itself to its former glory. Our price estimate of $0.86 for RadioShack is slightly above the current market price. We maintain a cautious outlook on the company and estimate revenue of around $3.3 billion for fiscal year 2014. Our fiscal 2014 GAAP earnings per share estimate is -$1.74 as compared to the market consensus of -$3.71 (as per Reuters).

See our full analysis for RadioShack

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