Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Wish RSH and BBRY (Blackberry) could work out a deal. I feel your pain.
I wonder if a mutual fund full of these struggling companies exists? Not sure what the future success ratio (gains vs losses) would need to be to make the fund profitable, but it sure would be an interesting fund.
From a distance these companies look like they have flat lined, but even at these near dead levels they can vibrant 30% or more in short periods of market interest. Investing in periodic price volatility of a stock can be a relative thing. I'm not smart enough to pull this off, but others might be.
HH Gregg (aka Best Buy, Jr.) -11% today. There are a number of retail companies that have gone past their expiration date and I wonder if some of them would have been long gone if it wasn't for the cheap money and desire for yield of recent years. There's value in BBRY, I don't see it in RSH, HGG or a number of other struggling retailers.
Not smart enough here to pull this off consistently, but I used to do this several years back on a small portion of the portfolio. My view is that you need to identify the trend at the next higher time-scale vs. your trading scale (e.g., if you want to day-trade, look at a trend of say 1-3 months; if you wan to trade for weeks, identify trend for 6-12 months, etc.) and trade with the trend. In other words, if your identified trend is strong bullish, you buy on the dips at the smaller scale, ride up with a stop loss. If your trend is strong bearish, you short on bounces counter to the trend, ride down with a stop loss. If there is no bull or bear trend, do not trade. Just find something with a trend to trade. Easier said than done though.
There's probably some value there, but I think it's a question of whether that is compelling value to common shareholders or potential value to people who are going to pick over the pieces. Unfortunately, I think it's the latter. There are all of these people who are trying to pick the bottom in things like JCP and Radio Shack. I think things are simply changing. I loved Woolworths as a kid - I'm lucky to have been a child at the very end of the "dime store" era and still have fond memories of these stores. There was a retail chain called Venture that I LOVED as a kid. That ended and some of the people went to Target - you can see a lot of Venture in Target, but Venture had more personality (there was still that sort of "dime store feel") and wasn't as slick.
Radio Shack is just ... what? It's unfortunate, but it just really can't compete with Amazon, Best Buy and others. They can sell phones, I guess, but so can a million other places. I guess there's something to be said for the idea of "flipping" the concept of Best Buy and Radio Shack - does Best Buy need to have all giant stores, or could you have "express" stores the size of Radio Shacks? Best Buy has its own issues though.
I'm rambling, but I just continue to see a significant change in retail overall and unfortunately, there are going to be names (HH Gregg, Radio Shack. There's too many teen retailers, too.) are not going to be around. Mall shopping is in decline. "In January, Rick Caruso, the C.E.O. of Caruso Affiliated, one of the largest privately held American real-estate companies, stood on a stage at the Javits Center, in New York, and forecast the demise of the traditional mall. “Within ten to fifteen years, the typical U.S. mall, unless it is completely reinvented, will be a historical anachronism—a sixty-year aberration that no longer meets the public’s needs, the retailers’ needs, or the community’s needs,” he told his audience, which had gathered for the National Retail Federation’s annual convention." (http://www.newyorker.com/online/blogs/currency/2014/03/are-malls-over.html)
This is also kind of an interesting point from the same article: "Reinventing malls—and the stores that they house—might not be as straightforward as it seems. For all his shortcomings, Ron Johnson, the much criticized former C.E.O. of J. C. Penney, understood the warnings. He reënvisioned J. C. Penney stores, with their enormous—and enormously dated—open spaces, as places for people not only to shop but to hang out, drink coffee, and surf the Internet. His remodelling blueprints called for a “street” inside each store leading to a spacious “square” that could host yoga classes and other events. But there were two problems with the plan: sales were falling too quickly to support the tremendous renovation costs, and, even if J. C. Penney could have covered the expenses, the stores would have remained stuck in old-fashioned malls. In that sense, Johnson’s previous job running Apple’s retail stores was far simpler—just plunk down a gleaming glass cube on the most profitable shopping streets around the world. Now under new leadership, J. C. Penney has completed only a fraction of the remodelling plans."
You also see mall companies spinning off properties or lesser/smaller properties. General Growth did so with Rouse, Simon is spinning off a number of their malls and REIT American Reality Capital Properties is spinning off its malls to shareholders in a new REIT later this year.
The thing is that concerns me even more than malls is strip malls. The generic "dime-a-dozen" strip mall that has the Staples or Office Max and an assortment of other such things (like Radio Shack) I think is going to have a lot of trouble down the road.
Tanger Outlets (SKT) is really the only retail REIT I'd be interested in. The high-end outlet concept is doing well and I think really will continue to have strong appeal, given the perception of value.
Some companies will learn and adapt, I just don't think Radio Shack is, at this point, capable of doing so.
As I've said before, I also don't know WTF Gamestop does longer term. To me, Gamestop is Radio Shack down the road. Gamestop lucked out this time around that consoles didn't go purely download. Next time it might be different. Used games is big for Gamestop - the other day WalMart started buying games and giving store credit. There has been some discussion of buying used phones/tablets, but what kind of moat does Gamestop have in that department?
Sears isn't getting any better, either. Spun-off Lands End, which has proceeded to lose more than 25% since it was spun-off a month ago.
@Scott, the biggest problem with Johnson and JC Penney is that he didn't understand his target market (or he was completely trying to replace it to another segment which is even more foolhardy).
The people who shopped in JC Penney traditionally aren't people with either discretionary income or time to need yoga classes or coffee sold at high prices (floor space is too expensive to sell cheap coffee even with indirect benefits). At Apple, he didn't have to fit a product to an audience, the products were selling themselves.
Sales people usually don't make good change agents, their expertise comes from pushing stable products to customers that marketing has already targeted and designed for.
A vision is good for the future but you also need a plan to get there realistically.
Metamorphosis: It's hardly ever mentioned, but Radio Shack in it's present iteration is nothing like the original. In the early days of radio, amateur radio operators (hams) frequently built their own equipment, which was large, noisy, rather military looking, and tended not to fit in well with normal household furnishings. It was not uncommon for those guys (with the encouragement of their wives: "Will you please get that junk outta here!") to build a small "radio shack" in the yard behind their house. The term "radio shack" was also used for the space devoted to the newfangled radio equipment being installed on ships during the early days of radio communication.
In the 1920's, in Boston, a store opened to help supply the needs of those hams, and called itself, appropriately, "Radio Shack". It did OK, but was hardly a barn-burner of a business.
Meanwhile another entity, Tandy, had a decent number of stores and mail-order devoted to leather working and other crafts, but was also not a really great business.
For some strange reason Tandy decided to get out of craft supply and try their hand at radio parts, and then of course small electronics products as they evolved. It's certainly had it's ups and downs since then.
By way of a personal note, I owe my present happy retirement pretty much to Radio Shack, in an odd sort of way. From an early age I was always interested in electrical stuff, and out of high school became an electronics tech in the US Coast Guard. The transistor was invented right about then, and as a civilian my skill-set gradually became obsolete. After some 25 years of doing other stuff, I thought about electronics again, and realized that while vacuum tubes had pretty much disappeared, most of the other stuff was still around.
Thanks to a Radio Shack conveniently one block away, I gradually became familiar with most of the new-fangled solid-state and logic devices, and found it to be much more interesting than vacuum tube technology. PLUS- when you stuck your fingers into things there was only 5 volts or so rather than 300, which is very nice indeed.
That experience, plus more study, allowed me to qualify for a very well-paying job as a public-safety radio technician for San Francisco.
I really regret the change in fortunes for Radio Shack, and it will be something of a personal loss also as I still find useful gadgets and components there from time-to-time. But even that isn't the same: now virtually nothing is hand-built from components, and again my skill-set is obsolete. The younger techs use a laptop to analyze equipment operation, and simply replace whatever module is malfunctioning. If some special-purpose piece of equipment would be nice to have, forget it: the younger folks have no idea how to design or build stuff. If it isn't already manufactured, that's the end of the story. No more electronics innovations will be coming out of garages.
Now, for every dollar I spend at Radio Shack I spend a hundred or more at Amazon. End of story. Diamonds may be "forever", but not DeBeers, and not Radio Shack or any other business.
Kids still want these same experiences you had growing up.
A recent push by most school today is for kids to take standard tests which unfortunately makes learning about Technology less of a priority. Technology and Pre-Engineering curriculum is a more appropriate strategy to foster math and science knowledge by having kids apply these concepts to a problem or project. The world in whch you and I grew up was a fertile ground for future engineers, technicians, or backyard mechanics.
Today, some schools promote classes like Technolgy Education where kids solve problems and face challenges through "heath Kit" ( an old Radio shack product) like learning modules. One uses Lego Robotics and has a sports like design challenge for middle school kids called Lego League. Most of these kids graduate to the FIRST Robotics Competition for (both HS and MS Kids).
Apple's first successes happened in the educational setting with the Mac. No reason why Radio Shack couldn't refocus itself as an Educational Technology company for the modern day kid (in each of us).
@Scott, the biggest problem with Johnson and JC Penney is that he didn't understand his target market (or he was completely trying to replace it to another segment which is even more foolhardy).
Yoga or coffee or whatever, the idea of creating a multi-functional "destination" is interesting. They're clearly not competing well as is, as TJX continues to win.
There is the aspect of not understanding the customer at JCP, certainly, who wanted coupons and when they were told that there's no more coupons but lower prices, the customer was upset to the point where they practically revolted. However, was that really a wrong decision or a failure to sell the idea? Change is good, although it feels like the retail customer needs to be guided through an evolution and gets dismayed at a revolution. JCP tried the latter.
Starbucks recently introduced La Boulange (which it bought last year) bakery items in stores. I've thought what I've tried of the new items have actually been very good (tastes fresher, too) and certainly an improvement over the food, which I've always thought has been on the generic side. Yet, people complained, "Where is the lemon cake?"
The idea of a re-imagining of the retail experience is a compelling one (whether it's yoga or whatever, but the idea of a JCP-style store as multi-functional destination), but people are so averse to change that it becomes a question of whether or not the company has the time and capability to really take such risks. JCP didn't.
Radio Shack's bread and butter business was that if no one else had it, they would have it in stock. Oddball and less common electronic stuff. They seem to have drifted away from that concept.
John- for a national chain, I'd think that's kind of a losing game. If it's oddball, there isn't going to be a great demand, and if it's not oddball, well let's just try Amazon. I don't think that there are enough nerds like me to support RS. At one time RS even had a setup where you could order almost anything electronic from a central warehouse, but evidently that didn't meet their profit goals and was discontinued. There are still a few houses where that stuff can be obtained- Jameco, for one, which is pretty much an internet operation vs bricks & mortar.
I agree. Radio Shack is destined for the ash heap. I guess the bigger question is why it is taking so long? The internet is the best route for those oddball items.
Comments
I wonder if a mutual fund full of these struggling companies exists? Not sure what the future success ratio (gains vs losses) would need to be to make the fund profitable, but it sure would be an interesting fund.
From a distance these companies look like they have flat lined, but even at these near dead levels they can vibrant 30% or more in short periods of market interest. Investing in periodic price volatility of a stock can be a relative thing. I'm not smart enough to pull this off, but others might be.
strong bullish, you buy on the dips at the smaller scale, ride up with a stop loss. If your trend is strong bearish, you short on bounces counter to the trend, ride down with a stop loss. If there is no bull or bear trend, do not trade. Just find something with a trend to trade. Easier said than done though.
Radio Shack is just ... what? It's unfortunate, but it just really can't compete with Amazon, Best Buy and others. They can sell phones, I guess, but so can a million other places. I guess there's something to be said for the idea of "flipping" the concept of Best Buy and Radio Shack - does Best Buy need to have all giant stores, or could you have "express" stores the size of Radio Shacks? Best Buy has its own issues though.
I'm rambling, but I just continue to see a significant change in retail overall and unfortunately, there are going to be names (HH Gregg, Radio Shack. There's too many teen retailers, too.) are not going to be around. Mall shopping is in decline. "In January, Rick Caruso, the C.E.O. of Caruso Affiliated, one of the largest privately held American real-estate companies, stood on a stage at the Javits Center, in New York, and forecast the demise of the traditional mall. “Within ten to fifteen years, the typical U.S. mall, unless it is completely reinvented, will be a historical anachronism—a sixty-year aberration that no longer meets the public’s needs, the retailers’ needs, or the community’s needs,” he told his audience, which had gathered for the National Retail Federation’s annual convention." (http://www.newyorker.com/online/blogs/currency/2014/03/are-malls-over.html)
This is also kind of an interesting point from the same article: "Reinventing malls—and the stores that they house—might not be as straightforward as it seems. For all his shortcomings, Ron Johnson, the much criticized former C.E.O. of J. C. Penney, understood the warnings. He reënvisioned J. C. Penney stores, with their enormous—and enormously dated—open spaces, as places for people not only to shop but to hang out, drink coffee, and surf the Internet. His remodelling blueprints called for a “street” inside each store leading to a spacious “square” that could host yoga classes and other events. But there were two problems with the plan: sales were falling too quickly to support the tremendous renovation costs, and, even if J. C. Penney could have covered the expenses, the stores would have remained stuck in old-fashioned malls. In that sense, Johnson’s previous job running Apple’s retail stores was far simpler—just plunk down a gleaming glass cube on the most profitable shopping streets around the world. Now under new leadership, J. C. Penney has completed only a fraction of the remodelling plans."
You also see mall companies spinning off properties or lesser/smaller properties. General Growth did so with Rouse, Simon is spinning off a number of their malls and REIT American Reality Capital Properties is spinning off its malls to shareholders in a new REIT later this year.
The thing is that concerns me even more than malls is strip malls. The generic "dime-a-dozen" strip mall that has the Staples or Office Max and an assortment of other such things (like Radio Shack) I think is going to have a lot of trouble down the road.
Tanger Outlets (SKT) is really the only retail REIT I'd be interested in. The high-end outlet concept is doing well and I think really will continue to have strong appeal, given the perception of value.
Some companies will learn and adapt, I just don't think Radio Shack is, at this point, capable of doing so.
As I've said before, I also don't know WTF Gamestop does longer term. To me, Gamestop is Radio Shack down the road. Gamestop lucked out this time around that consoles didn't go purely download. Next time it might be different. Used games is big for Gamestop - the other day WalMart started buying games and giving store credit. There has been some discussion of buying used phones/tablets, but what kind of moat does Gamestop have in that department?
Sears isn't getting any better, either. Spun-off Lands End, which has proceeded to lose more than 25% since it was spun-off a month ago.
Hey, maybe it's simply that most companies exist to make real money for just the few execs running them.
Period.
They are not really motivated to return value to shareholders, as evidenced by the fact that most stocks under-perform the index over their lifetimes.
The people who shopped in JC Penney traditionally aren't people with either discretionary income or time to need yoga classes or coffee sold at high prices (floor space is too expensive to sell cheap coffee even with indirect benefits). At Apple, he didn't have to fit a product to an audience, the products were selling themselves.
Sales people usually don't make good change agents, their expertise comes from pushing stable products to customers that marketing has already targeted and designed for.
A vision is good for the future but you also need a plan to get there realistically.
In the 1920's, in Boston, a store opened to help supply the needs of those hams, and called itself, appropriately, "Radio Shack". It did OK, but was hardly a barn-burner of a business.
Meanwhile another entity, Tandy, had a decent number of stores and mail-order devoted to leather working and other crafts, but was also not a really great business.
For some strange reason Tandy decided to get out of craft supply and try their hand at radio parts, and then of course small electronics products as they evolved. It's certainly had it's ups and downs since then.
By way of a personal note, I owe my present happy retirement pretty much to Radio Shack, in an odd sort of way. From an early age I was always interested in electrical stuff, and out of high school became an electronics tech in the US Coast Guard. The transistor was invented right about then, and as a civilian my skill-set gradually became obsolete. After some 25 years of doing other stuff, I thought about electronics again, and realized that while vacuum tubes had pretty much disappeared, most of the other stuff was still around.
Thanks to a Radio Shack conveniently one block away, I gradually became familiar with most of the new-fangled solid-state and logic devices, and found it to be much more interesting than vacuum tube technology. PLUS- when you stuck your fingers into things there was only 5 volts or so rather than 300, which is very nice indeed.
That experience, plus more study, allowed me to qualify for a very well-paying job as a public-safety radio technician for San Francisco.
I really regret the change in fortunes for Radio Shack, and it will be something of a personal loss also as I still find useful gadgets and components there from time-to-time. But even that isn't the same: now virtually nothing is hand-built from components, and again my skill-set is obsolete. The younger techs use a laptop to analyze equipment operation, and simply replace whatever module is malfunctioning. If some special-purpose piece of equipment would be nice to have, forget it: the younger folks have no idea how to design or build stuff. If it isn't already manufactured, that's the end of the story. No more electronics innovations will be coming out of garages.
Now, for every dollar I spend at Radio Shack I spend a hundred or more at Amazon. End of story. Diamonds may be "forever", but not DeBeers, and not Radio Shack or any other business.
Kids still want these same experiences you had growing up.
A recent push by most school today is for kids to take standard tests which unfortunately makes learning about Technology less of a priority. Technology and Pre-Engineering curriculum is a more appropriate strategy to foster math and science knowledge by having kids apply these concepts to a problem or project. The world in whch you and I grew up was a fertile ground for future engineers, technicians, or backyard mechanics.
Today, some schools promote classes like Technolgy Education where kids solve problems and face challenges through "heath Kit" ( an old Radio shack product) like learning modules. One uses Lego Robotics and has a sports like design challenge for middle school kids called Lego League. Most of these kids graduate to the FIRST Robotics Competition for (both HS and MS Kids).
Apple's first successes happened in the educational setting with the Mac. No reason why Radio Shack couldn't refocus itself as an Educational Technology company for the modern day kid (in each of us).
Some links:
firstlegoleague.org/challenge/thechallenge
science.ksc.nasa.gov/robotics/first/st-louis-2014/
There is the aspect of not understanding the customer at JCP, certainly, who wanted coupons and when they were told that there's no more coupons but lower prices, the customer was upset to the point where they practically revolted. However, was that really a wrong decision or a failure to sell the idea? Change is good, although it feels like the retail customer needs to be guided through an evolution and gets dismayed at a revolution. JCP tried the latter.
Starbucks recently introduced La Boulange (which it bought last year) bakery items in stores. I've thought what I've tried of the new items have actually been very good (tastes fresher, too) and certainly an improvement over the food, which I've always thought has been on the generic side. Yet, people complained, "Where is the lemon cake?"
http://www.bloomberg.com/news/2014-04-01/starbucks-retools-pastry-menu-after-customers-complain.html
The idea of a re-imagining of the retail experience is a compelling one (whether it's yoga or whatever, but the idea of a JCP-style store as multi-functional destination), but people are so averse to change that it becomes a question of whether or not the company has the time and capability to really take such risks. JCP didn't. The idea of RSH for Amazon kinda makes sense if you want an "Express" style store (pick up orders, a small assortment of products.)
Does Amazon really want to go full on into retail, where they've always had the advantage of not having B & M overhead?
@Old_Joe & bee. Good stuff squared.
Hey, while I liked Radio Shack I loved Edmunds Scientific.
Think it is still around, but it too has a different feel these days.
Ah well...the good old days