Yesterday April 23rd Texas based electronic retailer RadioShack held its Q1 2013 Earnings Call lead by Bruce Bishop new CEO Joe Magnacca; and Dorvin Lively, Executive Vice President, Chief Financial Officer and Chief Administrative Officer.
And to no ones surprise Private Brand played a prominent role in the call.
Magnacca spoke of the evolving strategy: “Another element of our merchandising strategy relates to our private brands. We are planning to rationalize the number of brands that we have and revive the technology innovation capabilities that are part of RadioShack’s heritage. You can already see this in our audio headphones and Bluetooth speakers, and more products like this are in the pipeline. This will also manifest itself in the do-it-yourself categories where we have new microcontrollers and kits coming this summer.”
He went on to say: “The number of exciting opportunities for growth in our vendors and our private brand of products, we also have a team looking at products we could ship from our stores to our online channel, and opportunities to match the product in a specific store to the demand seen in that store’s trade area. The outcome of this will lead to a much better customer experience in our stores as we rationalize the SKU count and drive better in-stock performance on the items we carry. We will expand our assortment online and quickly meet the customers’ needs when an item is available at a store location. We believe this will lead to a much better productivity from both our physical stores and our online channel.”
“RadioShack has a uniquely strong franchise. We have a powerful brand that has stood the test of time for 9 decades and has a large loyal customer following. We have strong relationships with leading vendors and a portfolio of trusted private brands that offer highly innovative technology products. “
During the Q&A portion of the call Q&A Brad Thomas of Keybanc Capital Markets asked the army of analysts favorite shallow question: “Joe, you talked about rationalizing brands and, obviously, growing the signature category. Could you just talk a little bit more specifically about where private label is as a percentage of sales and perhaps where you think that could go?”
And Magnacca responded
“Yes. I think one of the historical benefits of our business in the past has been the fact that we have been kind of leading-edge private brand. And I would say that as a business, we’d probably move to more of a private-label strategy where we became more national brand equivalent and put more focus on brands. And I would suggest that not that the balance of our business is necessarily wrong, but how we actually participate in that segment is not where I’d like it to be. I’d like us to be a more leading-edge as opposed to more me too, and avoid duplication of SKUs with some of those strong national brands. So I’m not saying the mix — I wouldn’t say the mix is necessarily wrong. I’d say our assortment within the mix is the area of opportunity. And the group just came back from 5 weeks in China with a very clear focus on developing leading-edge product and being highly innovative, which I believe was our history and something that we’ve lost over the past few years. So it’s not about penetration, it’s about what’s in that SKU assortment within our brands. And as I mentioned, we’re within private brand looking at everything, from the brands we currently operate under, because we operate under many brands, including Point Mobile and Gigaware. But we believe we have tremendous equity inside the RadioShack brand itself in that portfolio. So that work is happening and you’ll start to see that starting to show up in the product development that will start hitting this summer.”
In short Magnacca will consolidate the highly fragmented portfolio and don’t be surprised to see the Radio Shack brand on product front and center – Is it too much to ask for a rebirth of Tandy?
SOURCE: Seeking Alpha