RadioShack Cuts Price for Galaxy S 5

Zacks

The struggling American franchise of electronics retail stores, RadioShack Corp. (RSH), is offering customers a $50 discount for in-store Samsung Galaxy S 5 pre-orders. The company will fill in the pre-orders for Samsung Galaxy S 5 from mid-April.

To sweeten the deal in favor of its customers, RadioShack is offering an additional concession of $75–$300 in its Trade and Save program. Notably, the upcoming Galaxy S 5 accessories and Samsung GEAR smartwatches will also be available in the RadioShack stores.

The company’s core Consumer Electronics retail business is on a secular downtrend as the rising trend of shopping through tablets and smartphones is lowering profits of the retail industry. We believe that the pre-order and Trade and Save program announced by RadioShack will particularly attract customers who prefer making online purchases over visiting retail stores.

Recently, RadioShack announced its intent to close 1,100 unprofitable outlets after it reported dismal numbers for the eighth consecutive quarter. This decision is part of its strategy to spur growth.

After shutting down nearly 20% of its outlets, the company’s operating expenses are likely to reduce. However, until the comparable store sales improve, a drastic turnaround in its business is impossible. RadioShack is facing stiff competition from retail giants like Amazon.com Inc. (AMZN), Best Buy Co. Inc. (BBY) and Conns Inc. (CONN).

In the recently concluded quarter, the company’s top and bottom line missed the respective Zacks Consensus Estimate. More importantly, the company’s comparable store sales for the operated stores and kiosks (stores and kiosks that have been operational for at least a year) declined 19%.

RadioShack currently has a Zacks Rank #4 (Sell).

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