Actually, most of the mall locations have much higher overhead costs per sq ft. While some malls have healthy traffic, count the actual "bags" that come out. Lots of looking, not only in RS, but most other mall stores as well, but little actual buying. US shoppers are much smarter, and prefer outparcel "big-box" locations that can offer better prices along with somewhat decent service. These are the locations between mall and neighborhood, where RS needs to locate.
The above link is from the Google finance page. It contains some good press for Claire Babrowski as well as a good assessment of the problems facing the company.
Babrowski sounds like an able leader. According to the article above, she rose from a very low to a very high position within the McDonald's organization on the basis of her skills. Maybe RSH should give her a chance.
As far as small box elecronics retailing being a dead concept, Wired Magazine reported in the recent past that BBY itself is investing in three small box concepts to be aimed at a more targeted clientele than the BBY franchise itself. I can't remember the names of the these concepts. Folks can do their own DD on this question.
RSH has a very modest amount of debt, a bit above $1/2 billion. So as far as the bankruptcy threat goes, the company has plenty of time to solve its problems. Even as the stock was falling this last year, the company was earning 5% net income margins in the first half of the year. Admittedly, things were a little worse at the end, with net income margins falling to 3% in the last qtr. of '05. But by my own calculations, BBY's net income margins in its last qtr. of '05 (ended Nov.) were below 2%.
If RSH has to make do with 3% profit margins for a period of time until it finds a more winning formula, this level of profitability will still provide the shares with > than $1 of earnings per year.