RadioShack posts 3Q loss, misses Street's view
FORT WORTH, Texas (AP) — RadioShack reported a larger-than-expected loss for its third quarter as the electronics retailer's revenue slipped.
The struggling company has seen its profits erode over the past two years and in September it announced the departure of CEO James Gooch. The chain's troubles are partly due to wider problems in the brick-and-mortar electronics industry and add fuel to the notion that selling consumer electronics in brick-and-mortar stores is becoming less and less viable.
Interim CEO Dorvin Lively said that RadioShack had raised $175 million in new financing during the quarter and used those proceeds and some available cash to repay some debt.
After falling in premarket trading, RadioShack shares rose 10 cents, or 4.2 percent, to $2.49 in midday trading.
For the three months ended Sept. 30, RadioShack Corp. lost $47.1 million, or 47 cents per share. That compares with a net income of $300,000, or breakeven results, a year earlier.
Removing impairment charges and selling, general and administrative expenses, the Fort Worth, Texas-based company lost 33 cents per share. Analysts forecast a loss of 18 cents per share, according to a FactSet survey.
Revenue declined 3 percent to $1 billion from $1.03 billion, missing Wall Street's $1.04 billion estimate.
Revenue at stores open at least a year, a key measure of a retailer's health, fell 1.6 percent. This figure excludes results from stores recently opened or closed.
David Strasser of Janney Capital Markets said in a client note that sales at Target kiosks were flat, which was below the double-digit increase he forecast. The analyst said weak sales at the kiosks led RadioShack to try to renegotiate its deal with Target Corp. Strasser said RadioShack notified Target earlier this month that it plans to stop running the kiosks by no later than April if a mutual agreement isn't reached.
"This is necessary, as the company cannot continue with losing ancillary businesses as it struggles to be profitable in their core U.S. businesses," he wrote.
Gross margin — the amount of each dollar in revenue a company actually keeps — declined as shoppers picked up smartphones, which are less profitable for retailers.
RadioShack and Best Buy Co. are dealing with shoppers who are increasingly moving away from devices like computers and cameras to buy tablets and smartphones.
Last month RadioShack said that Gooch was leaving under an agreement with its board, which he also stepped down from. Lively, who had been chief financial officer, was named interim CEO.
Lively said in a statement that the new financing in the past quarter left the company's liquidity at more than $900 million. RadioShack's total debt was $749 million at quarter's end.
RadioShack has about 4,700 company-run stores in the U.S. and Mexico, 1,500 wireless phone centers in the U.S. and approximately 1,100 dealer and other outlets worldwide.