RadioShack loss widens to $98.3 million

RadioShack

Credit: Getty Images

People walk past a RadioShack store in Manhattan on July 26, 2012. (Photo by Mario Tama/Getty Images)

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by NANCI HELLMICH

USA TODAY

Posted on June 10, 2014 at 10:48 AM

Times are still tough for Fort Worth-based RadioShack. The consumer electronics retailer said its first-quarter loss widened to $98.3 million as sales slid for the ninth straight quarter.

Company shares slid 9.7% to $1.39 in late-morning trading.

Weak sales of phones, aggressive price competition and an industry-wide decline in consumer electronics sales contributed to the loss, the company said.

Comparable store sales fell almost 14% from a year earlier.

RadioShack's loss was 97 cents per share compared with a loss of 28 cents per share, or $28 million, a year earlier. Revenue was $736.7 million, down 13%.

Excluding certain items, its loss from continuing operations was also 97 cents per share. Analysts, on average, expected a loss of 52 cents per share, according to a FactSet poll.

The company still plans to close 200 stores by the end of its fiscal year in January.

CEO Joseph Magnacca said that RadioShack is working on building its pipeline of new products, including private brand and exclusive items such as those from new partnerships with Quirky and PCH.

The retailer launched a nationwide Fix It Here program for phones and tablets with cracked screens, broken buttons, faulty cameras, water damage, audio issues and other maladies, that it hopes will lure customers into the stores. Major selling point: in select markets RadioShack promises same-day repair service.

The company expects to close up to 200 stores which will be selected based on location, area demographics, lease life and financial performance, the Fort Worth, Texas-based company said in a statement. RadioShack backed off plans to close up to 1,100 stores because it was unable to reach an agreement with its lenders.

Sales at stores open at least a year, a key gauge of a retailer's health, fell 14% on softer traffic and weakness in the mobile business. This metric excludes results from stores recently opened or closed.

Still, Magnacca said, "We are also successfully reducing our costs, with a particular focus on removing expenses that do not impact the customer experience, and have taken steps to lower our corporate headcount, leverage technology, and reduce discretionary expenses."

RadioShack operates 4,300 stores in the U.S., 274 in Mexico, and about 950 dealer outlets worldwide. The company has struggled to remain competitive in the 21st century tech landscape as competitors like Best Buy, Walmart, the Verizon store, and Amazon increasingly offer the same products but with a wider selection and lower prices.

Michael Pachter, an analyst at Wedbush Securities in Los Angeles, says, "RadioShack has everything moving in the wrong direction: Comps are down double digit, gross margins are declining, and operating expenses as a percentage of sales are going up. This is a triple whammy, and it's pushing them closer to extinction."

Contributing: The Associated Press

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