RadioShack Q3 Loss Widens, Unveils Cost-reduction Initiatives

(RTTNews) - Consumer electronic goods retailer RadioShack Corp. (RSH) on Thursday reported a wider loss for the third quarter, reflecting a 13 percent decline in comparable store sales due to traffic declines and soft performance in mobility business.

The company also said it has commenced a detailed set of cost reduction initiatives designed to enhance earnings by over $400 million annually.

RadioShack's net loss for the third quarter widened to $161.1 million or $1.58 per share from $135.9 million or $1.35 per share in the same period last year.

On an adjusted basis, loss per share from continuing operations was $1.23 per share, compared to loss of $0.90 per share in the year-ago period.

On average, eight analysts polled by Thomson Reuters expected the company to report loss of $1.04 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales and operating revenues for the quarter declined 16 percent to $650.2 million from $775.4 million in the same period last year. Analysts were looking for revenue of $717.03 million for the quarter.

Comparable store sales declined 13.4 percent, driven by traffic declines and soft performance particularly in mobility business. Sales in the mobility platform declined 24.7 percent.

Joseph Magnacca, chief executive officer of RadioShack, noted that challenges in the postpaid mobility business drove the majority of the weak performance in the quarter.

In the retail segment, the other half of RadioShack's business, comparable store sales at U.S. company-operated stores declined only 2 percent compared to last year, and improved throughout the quarter as the company focused on higher margin products, including private brand, and innovative new programs like 'Fix It Here.'

RadioShack noted that over the three-day Thanksgiving holiday, comparable store sales in its U.S. corporate stores were up 35 percent for the retail segment, while comparable store sales at mobility was down 27 percent.

The company's gross margin for the quarter expanded 180 basis points to 32.9 percent. Total operating expenses declined 11 percent from last year to $328.3 million.

RadioShack said it has commenced a detailed set of cost reduction initiatives to boost earnings by over $400 million annually.

The cost-reduction initiatives encompass a range of operating cost reductions related to headquarters, field, stores, and store support to improve operational efficiency and right-size the company's business, as well as the benefit of targeted store closures.

Looking ahead, Magnacca said, "We are focused on three overarching operational imperatives: 1) reducing costs to end our negative cash flow, 2) driving growth and profitability through our retail platform, and 3) returning to a healthy mobility business that, while much smaller in terms of revenues than in recent years, will be substantially more profitable than our recent results."

RSH closed Wednesday's trading at $0.55, down $0.02 or 3.34 percent on a volume of 1.41 million shares.