New ceo to keep Tandy focused on the core

Discount Store News, June 8, 1998 by Laura Heller

FORT WORTH, TEXAS - "Going forward, the message is simple: Tandy is RadioShack, RadioShack is Tandy," declared ceo-elect and current president of Tandy Leonard Roberts.

Speaking at the company's annual shareholders meeting in Fort Worth, Texas, on May 21, Roberts reported strong growth for Tandy and shared his vision for the future of the company.

And that vision couldn't be any clearer: The future of Tandy is inextricably linked to the success of RadioShack.

The spin-off of Computer City should be accomplished by the end of this year, and TechAmerica, with two existing stores, is still considered experimental.

"Make no mistake about it," Roberts said. "Our core competency is the unparalleled distribution and people strength of RadioShack and the infrastructure deployed to support the RadioShack enterprise."

RadioShack stores experienced 2% comp store sales gains in 1997. First quarter same store sales this year were 11%, and total sales were up 13% throughout the chain in the first quarter.

Earnings for the RadioShack segment of Tandy, which includes the retail stores and related support services, were up 36% from the previous year.

With approximately 7,000 existing stores in the United States, RadioShack has essentially saturated the market. New growth and earnings, therefore, will come from Tandy's ability to leverage its nationwide distribution system, Roberts said.

The strategy is to capitalize on the location and proximity of Radio Shack stores to the American public, leveraging them as distribution centers to vendor partners.

"We believe that more and more businesses will consume an ever increasing portion of disposable income from our customers through services such as Sprint long distance, Sprint PCS, cellular, direct-to-home satellite, paging and many more, Roberts explained.

"The earnings opportunity of this revenue stream with virtually no capital investment can reap huge rewards," he said. "It is conceivable that within three to four years, [it] may exceed $100 million per year."

It is also equivalent to the revenue generated by opening 500 new RadioShack stores per year, Roberts told the press after the annual meeting. "It is a very profound expansion strategy."

Strategic alliances will continue to play a crucial role in Tandy's success. The Compaq Computer store-within-a store continues to be rolled out to all RadioShack stores at a rate of 300 stores each week. The task is expected to be completed by August. An expanded peripherals selection will be featured with RadioShack and Compaq brand products merchandised together, Roberts said.

"The biggest highlight of 1998 will continue to be the growth of our telecommunications business," Roberts said. RadioShack stores currently sell 40,000 telephone accessories each day and have more than 50% of the retail market share in wireless technology. Roberts expects the company to sell between 400,000 and 500,000 long distance services in 1998.

"You can plan on double-digit sales increases in all of the telecommunications categories throughout 1998," Roberts said.

RadioShack will also introduce a new merchandising section called the PowerZone to better display batteries and power products.

In other business, Tandy elected 10 new board members and later announced the appointment of Edwina Woodbury as director of the board. Woodbury is executive vp, business process design at Avon Products Inc.

There also was a bitter-sweet moment as the company bid a farewell to long-time ceo John Roach, who is retiring at the of this year.