Radio Shack and Target are splitting up; who gets the kids?
Target's mobile phone kiosks will be run by Radio Shack until April
Things are so bad at the Shack that credit ratings agency Fitch recently lowered the company's debt rating to CCC which is a few rungs under "junk". Meanwhile, by eliminating the dividend and restructuring some debt due this year, the company is trying to conserve cash to keep going. Fitch had cut its ratings due to a steep drop in the retailer's profitability.
That leaves Target. Will the discount retailer give up on mobile phones, do it themselves, or find a new partner? Target has until April to decide.
1. Ruckus (Posts: 276; Member since: 20 Oct 2011)
Ouch! I had heard this might happen. Hopefully both will have benefited in ways.
2. mullman85 (Posts: 12; Member since: 28 Dec 2011)
Target Mobile isn't going anywhere. They will just no longer be operated by Radioshack. Target will continue the operation and will become stronger.
3. BREvenson (Posts: 207; Member since: 17 May 2012)
Yep. Not a good time to be a Radio Shack stockholder. Stock has been plummeting, people just aren't buying many phones from them. As a former employee, I can easily say that even now, people don't see RS as a viable retailer for smartphones. While it does account for half of their sales, the fact that their sales have been low for quite some time does indeed hamper the overall effect of any good news they've had.
Those are the breaks...hopefully both Target and Radio Shack can save face and stay alive long enough to try and recoup their losses. Target should be okay; they get plenty of revenue from the other aspects of their retail operations. Radio Shack, on the other hand...I don't know.
4. mullman85 (Posts: 12; Member since: 28 Dec 2011)
No sales associates will lose their jobs in this. Brightstar and MarketSource will assume responsibilities previously managed by RadioShack. Target Mobile will undergo a transition period between now and April 8, 2013 to ensure there is little to no disruption in the guest experience.
6. ceepyou (Posts: 33; Member since: 10 Apr 2012)
You are 100% right in this. Brightstar is the supplier for RS, Wal-Mart, Best Buy, Amazon, and many other brick and mortar and online retailers. With them heading the operation, the middleman has been cut out and Target will see more profits. RadioShack ended their contract early because it was neither ethical or fair to continue under the same business model. MarketSource employs many T-Mobile reps. The experience is there. Expect Target to invest more capital in nationwide advertising outside of their circular.
5. CapedCrusaderRobin (Posts: 31; Member since: 19 Dec 2010)
what they dont tell you is that behind the scenes at RS one of the efforts to conserve the cash flow is by cutting the cash flow in the form of commissions to their sales associates when making phone sales.
Used to be $30 commission on every new activation ($15 on add a line) now its down to $14 on a new activation and $7 on add a lines. Prepaid activations stay at $5 for every sale. Also they been cutting their older salaried staff and hiring more part timers to pick up the slack, and have taken away personal assistants from district managers and demoted them (the personal asst.) down to sales associates if they wanted to still stay employed.
7. donfem (Posts: 553; Member since: 30 Mar 2011)
Re-diversification with accurate planning will do both of them a great deal.