RadioShack Q4 Loss Widens On Lower Margins, Sales Decline

(RTTNews) - Consumer electronic goods retailer RadioShack Corp. (RSH) reported Tuesday a loss for the fourth quarter that widened from last year, reflecting lower gross margins, significantly higher expenses and a sales drop.

Comparable same-store sales also decreased 19 percent. Adjusted loss per share also came in significantly wider than analysts' expectations, and quarterly sales also missed their estimates.

"Our fourth quarter financial results were driven by a holiday season characterized by lower store traffic, intense promotional activity particularly in consumer electronics, a very soft mobility marketplace and a few operational issues," CEO Joseph Magnacca said.

The Fort Worth, Texas-based company reported a net loss of $191.4 million or $1.90 per share for the fourth quarter, wider than $63.3 million or $0.63 per share in the prior-year quarter. Results for the latest quarter primarily include $40.8 million of impairment of long-lived assets and goodwill, while the year-ago quarter included $3.4 million of the same charge.

Excluding items, adjusted net loss for the quarter was $129.9 million or $1.29 per share, compared to adjusted net income of $6.8 million or $0.07 per share in the year-ago quarter. On average, 14 analysts polled by Thomson Reuters expected the company to report a loss of $0.14 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales and operating revenues for the quarter decreased to $935.4 million from $1.17 billion in the same quarter last year, and missed twelve Wall Street analysts' consensus estimate of $1.12 billion.

Comparable store sales declined 19 percent, driven by traffic declines and soft performance in the mobility business. However, the company reported strong sales growth in Concept Stores.

Gross margin for the quarter contracted 600 basis points to $29.8 percent from last year's 35.8 percent and selling, general and administrative expenses as a percentage of total sales increased 890 basis points to 41.8 percent from last year.

The company said it plans to close up to 1,100 underperforming stores in the U.S. as a result of a comprehensive review of portfolio over the past few months. The move comes as part of the company's strategy to consolidate store base into fewer locations while maintaining a strong presence in each market.

Despite the planned store closures, the company added that it will continue to have a strong, unmatched presence across the U.S. with over 4,000 stores including over 900 dealer franchise locations.

"Without minimizing the challenges ahead, we have a detailed strategic path to profitability based upon the five pillars of our turnaround. Our entire team is focused on execution as we work to improve our performance in the coming year," Magnacca added.

RSH closed Monday's regular trading session at $2.72, up $0.07 on a volume of 5.09 million shares. In the past 52-week period, the stock has been trading in a range of $2.02 to $4.36.