Struggling American franchise of electronics retail stores, RadioShack Corp. (RSH), has launched two fresh concept stores in China and Malaysia. The company also plans to expand its presence in the Asian market by opening additional stores over the next year. Despite this encouraging news, the company's shares declined nearly 3.0% since the announcement.
RadioShack partnered with First Honest Enterprises Ltd and launched its first concept store in China on Mar 21. The company along with its franchise partner Berjaya Retail Berhad re-launched an entirely modernized store in Kuala Lumpur, Malaysia.
RadioShack opened its first international concept store in Bangsar, Kuala Lumpur, in Nov 2013. These concepts stores give customers an innovative shopping experience. The new stores will allow customers to compare products of different brands before buying.
Notably, RadioShack and Berjaya Retail Berhad’s subsidiary have a long-term franchise agreement. The master agreement will enable RadioShack’s electronic chain to gain footprint in 10 Southeast Asian countries over a decade. The company sees international expansion in developing as well as developed tech market as a growth opportunity.
RadioShack currently has a Zacks Rank #5 (Strong Sell). The company reported dismal numbers for the eighth consecutive quarter. In fourth-quarter 2013, RadioShack’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%.
Despite benchmarks touching all-time highs, the company’s shares have tumbled 34% over the past one year. We believe that it will be difficult for the company to make a turnaround in its business because of competitive threat from retail giants like Amazon.com Inc. (AMZN), Best Buy Co., Inc. (BBY) and Conns Inc. (CONN). RadioShack’s core Consumer Electronics retail business is on a secular downtrend as lately, consumers prefer making online purchases over visiting retail stores.