Can These 5 Pillars Save RadioShack's Bacon?

Another quarter has passed for RadioShack and things are still looking pretty bleak for the once high-flying electronics retailer. This past quarter revealed that while The Shack's heart is still beating, it's on life support, and I'm doubtful it will come off anytime soon.

Mmmmmm... bacon
The key to The Shack's success depends on "five pillars" that will guide the turnaround strategy. Let's take a look at these five pillars and dissect what they really mean:

Repositioning the brand: Sounds great, but the fact of the matter is, the more time that passes, the less relevant RadioShack's brand is, which makes it even more difficult to reposition.

Revamping product assortment: One of the biggest problems RadioShack faces is that consumers can get what they sell virtually anywhere; there's no real differentiation at this point. And this problem is only growing worse.

Reinvigorating stores: The stores are part of the problem indeed, but I'm not sure reinvigorating them is going to make much of a difference. For the most part it's a matter of convenience, not the experience.

Operational efficiency: This is a must. Margins all the way across have fallen off a cliff for these guys, and if they don't pull it together it's over, Johnny.

Financial flexibility: Anytime a company calls out their financial flexibility in the release as "total liquidity," red flags should go up. This means they are looking at everything they have; it's not necessarily a good thing. Total liquidity of $818 million doesn't matter much if sales aren't going anywhere. And when we look at how RadioShack's most recent sales stack up against some formidable competitors, it's a tough road ahead:

TTM = trailing 12 months.

Give me the "how"
Management is bringing in a team to try to help turn this boat around. AlixPartners, a global business advisory firm specializing in turnarounds, is in the mix now along with Peter J. Solomon Company, which is an investment banking firm. Both hires are signs that RadioShack is digging in to try to figure out how to deal with a difficult situation, and they may very well have some creative ideas. But former CFO Dorvin Lively isn't sticking around to find out. He's taken off for greener pastures, and an interim CFO (a director at AlixPartners) has been named in light of his departure.

The Foolish bottom line
I can't say I'm all that optimistic where RadioShack's future is concerned, but maybe there's some potential here. While sales have remained flat over the last five years, management's pillars are at least an effort to get things moving. For me, though, they speak more to the "what" as opposed to the "how." And it's the "how" that really matters, isn't it? If RadioShack turns this ship around, it will be epic. I for one, though, will not be holding my breath.

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The article Can These 5 Pillars Save RadioShack's Bacon? originally appeared on Fool.com.

Jason Moser has no position in any stocks mentioned. The Motley Fool owns shares of 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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