Maybe We Should Just Call it "Radio Ramshackle"

Maybe We Should Just Call it "Radio Ramshackle"

I've been predicting the demise of RadioShack for a few years now. Four years ago, it was one of four stocks that I thought might be seeing its last Christmas, yet it has managed to hang on despite the collapse of movie rental chain Blockbuster, and bookstore Borders. (The fourth stock I felt was doomed, Sears Holdings, also is managing to cling to life.)

Late last year, I reiterated that, while bankruptcy might not be in the cards for RadioShack, there was serious doubt about its future, and trying to remain relevant, let alone solvent, by betting everything on smartphone sales suggested investors would do well to eschew investing in the electronic doodads seller.

News yesterday that The Shack was hiring a financial advisor to fix its balance sheet problems seems to validate my view that whatever else was in store for the retailer, growth and financial security wasn't one of them.

Like Best Buy , which also went all-in on cellphones to prop up declining flat-screen TV sales, the brick-and-mortar retail business model seems doomed. That's why Best Buy Mobile stores average around 1,500 square feet compared to the 38,000 square feet of the electronics superstore, and why they helped offset the 2.2% drop in revenues it experienced last year after closing down a number of its big-box stores.

RadioShack, which doesn't operate superstores on the scale of Best Buy, also tried the smaller-is-better routine to save money. It opened kiosks inside Target stores, but failed miserably, and the companies have since parted ways. Interestingly, Target also partnered with Best Buy to have their Geek Squad on hand, but that was a disaster, too, and was also killed.

The real-estate-lite model of has been the bane of big-box retailers everywhere. It might not be able to escape the sales tax any longer but, at this point, it doesn't need to, as it has achieved such scale that it can still effectively compete against retailers with a physical presence with aplomb.

And that's what's worrisome for RadioShack. It might have sufficient liquidity still, as it was quick to point out -- which helped restore much of the value it lost as investors made a pell-mell dash to the exits yesterday -- but even the need for a financial advisor points to the very weakness in its foundation.

As my colleague Steve Symington noted yesterday, RadioShack's abysmal performance lately has been exacerbated by having to write down failed initiatives like the $8.5 million Target debacle.

Unfortunately, as I've noted in the past, The Shack keeps trying new things hoping something will stick, like its joint venture with Cybermart to open stores in China, and one with Berjaya Retail Berhad to open stores in Malaysia. It eventually wants to have such partnerships to expand its footprint globally into 39 countries. The electronics retailer really needs to focus on its core operations here before launching such grandiose ideas worldwide.

Yesterday's news might not be the death knell for RadioShack yet, but it is heralding the end at last, and I still think investors in the electronics shop will be soon wistfully remembering the dreams of Christmas past.

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Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends The Motley Fool owns shares of and RadioShack. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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