RadioShack, a Holiday Coupon Promotion It Cannot Afford

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RadioShack Inc. (NYSE: RSH) is going after the Holiday gimmick just like it is any other company. The problem is that, on the surface, RadioShack cannot afford its promotion this year. The company has announced that will offer coupons of $10 back for every $50 spent now through January 5, 2013.

The big issue on the surface is that RadioShack is considered left for dead now in the consumer electronics sales market. Even if that belief is not entirely true, this sounds like something that it cannot afford. The reality is that this is a gimmick.

RadioShack said that customers may earn unlimited $10 off coupons by email for every $50 spent online or in-store, but this is "on qualifying purchases during the promotion."

One of the promotions is that every mobile phone or tablet purchased at RadioShack comes with free mobile product support for the life of the device. Customers automatically will be enrolled in the Mobile Product Support program.

As you might imagine, there is some fine print here. Coupons will arrive by email within seven days and may be redeemed one coupon per purchase on future purchases of $10 or more. The catch is that these coupons expire 30 days following their issue date. These coupons are also not valid on purchases of Bose, Apple and Beats by Dr. Dre™ products, airtime, gift/entertainment cards, services, special orders, refurbished items and purchases on radioshackwireless.com.

On the surface this sounds like something that RadioShack just cannot afford. After digging deeper, this is just a gimmick. Whether it can really afford it is something we will know at some point during or after the holidays.

To prove a point, RadioShack shares are now under $2.00 at $1.99, and its 52-week range is $1.98 to $12.13. Its market cap is only $200 million. The company's net tangible assets were listed as $625.5 million as of the end of September, and its cash balance was $546 million.

JON C. OGG


Filed under: 24/7 Wall St. Wire, Consumer Electronics, Retail Tagged: RSH
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