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Monday, February 20, 2006

RadioShack

RadioShack Corporation (formerly Tandy Corporation) (NYSE: RSH) runs a chain of electronics retail stores in the United States, as well as parts of Europe and South America. As of 2003, it has more than 7,000 stores in the USA and reported net sales and operating revenues of $4.6 billion. It will reopen stores in Canada after losing its former subsidiary InterTAN (independent since 1986) to a purchase by Circuit City in 2004. The head office of RadioShack is located in Fort Worth, Texas.

RadioShack's proprietary brands include Optimus (video equipment — discontinued, resurfacing at Christmas '05), Realistic (sound equipment — discontinued), Archer (wiring and antennas — discontinued), and Enercell (batteries and power accessories).


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. The store's name was taken from the name of the small structure that housed a ship's radio equipment at the time. ("Radio Shack" also refers to the room where a ham has his/her equipment.)

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 Realistic. After expanding to nine stores plus an extensive mail-order business, the company fell on hard times in the 1960s.


The Tandy years

In 1963 it was bought by the Tandy Corporation (which was originally a leather goods corporation) and renamed Tandy Radio Shack. Tandy eventually got rid of everything but electronics. Tandy also operated a chain similar to Radio Shack in the UK during the 1970s and 1980s, but under the Tandy name.

During the 1960s, Radio Shack marketed its free battery card; a wallet-sized cardboard card, free, which entitled the bearer to free flashlight batteries when presented at one of their stores. The cards became a well-known meme of the time, symbolic of what later came to be known as the nerd.

In 1977, Radio Shack introduced the TRS-80, one of the first mass-produced personal computers. Affectionately known as the Trash-80, the machine became a big hit. In the late 1980s, Radio Shack made the transition between its proprietary lines of 8-bit computers to its line of more-or-less IBM-compatible Tandy series of computers. However, shrinking margins and 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.

Its slogan since 1994 has been "You've got questions, we've got answers."


RadioShack Corp.

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 70's-style bullethole lettering to the current stylized R in 1996.

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 1990's. When the RCA contract ended in 2004, RadioShack added their own Accurian brand, and then reintroduced the Optimus brand in 2005 on low end products, and has since been discontinued. RS still has its own brand of batteries, Enercell.

Many Radio Shack stores still carry products dating as far back as the 1980's. Older Radio Shack 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 names and addresses of customers who made purchases so they could be added to the mailing list. Personal information is still requested when purchasing a cellular phone, service plan, mail order part, Direct2U item (which is a fee-free special ordering of a product not in stock), returning an item, or paying with a check. Names and addresses are also required when purchasing or redeeming a gift card. RadioShack customers may still opt to join the mailing list for monthly sale flyers.

In February 2006, RadioShack announced plans last week to close 400 to 700 company-operated stores and liquidate slow-moving inventory. It estimated it could incur costs of $55 million to $100 million on inventory write-downs and store closures this year, though some costs may bleed into 2007. [1]


CEO Resumé scandal

On February 20, 2006, the company announced that its CEO, David Edmondson, had resigned over questions raised about his resumé. He was immediately replaced by Claire Babrowski, former chief operating officer.

Edmondson, who became RadioShack's CEO last May after being groomed for the spot, admitted last week that he had "clearly" misstated his academic record on his resumé and on the company's Web site. RadioShack has promised to hire a lawyer to investigate the matter surrounding Edmondson.

RadioShack said last week that 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.

The company has updated its website, but Edmondson's resume is still availible online.



International operations

Operations in Canada


Pre 2005

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 Radio Shack and cancelled their agreement, meaning that all 950 Radio Shack 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 plans to open its own stores in Canada under the RadioShack name.


Post 2005

After preventing InterTAN from using the Radio Shack trademark, the company announced its intention to re-enter the Canadian market itself with a Canadian division. InterTAN is pursuing court action to prevent Radio Shack 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 Radio Shack by the end of 2005, mostly in the Toronto area, but progress has been slower than this. As of February, 2006, nine company owned stores had been opened and 14 dealer stores across were operating under the name Radio Shack, signing new agreements with Radioshack Corporation.


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 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.


Trivia

* The Caribbean district (Puerto Rico and US Virgin Islands) is currently no. 1 in sales and profit.
* The busiest and highest grossing store in the world is also in Puerto Rico, located in Plaza Las Americas mall which is also the most profitable mall by square foot in the world.
* RadioShack is currently the leading wireless retailer in the US. They sell more wireless phones than any other company.
* As of January 1st 2006, RadioShack is no longer selling Verizon Wireless, and has transitioned to sales of Cingular phones in all markets where it is available.

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