RadioShack 1Q earnings decline 30 percent
Fort Worth, TX, United States (AHN) – RadioShack slashed its full year outlook and posted a 30 percent drop in first quarter profit on Monday, sending shares of the Texas company falling more than 3 percent.
Quarterly net income was $35.1 million, or 33 cents a share, down from $50.1 million, or 39 cents, during the same period last year. Profit included costs related with early retirement of debts amounting to $4.1 million, or 2 cents a share.
Revenue rose 2.1 percent to $1.06 billion from $1.04 billion a year ago. It was short of expectations among analysts of $1.066 billion.
Sales were fueled by a $28.9 million rise revenue from kiosks, a partnership with Target that the company plans to expand by summer. The company’s mobility platform, which includes Sprint and AT&T postpaid wireless and prepaid wireless handsets, also grew 11 percent.
The increase in sales was offset in part by a $4.5 million drop in revenue from company-operated stores in the United States, and continued weak demand for digital converter boxes, television antennas and related products. Digital music players and other products under the consumer electronics unit, except for laptops, also performed weakly for a 14.8 percent drop.
Comparable store sales for company-operated stores and kiosks fell 0.6 percent due to a decline in sales in the retailer’s postpaid wireless venture with T-Mobile.
Moreover, Fort Worth-based RadioShack said its general and administrative expenses rose from $386 million, or 36.3 percent of sales, from $380.7 million, or 36.5 percent of sales. The expenses resulted from increased employee costs associated with the expansion of Target kiosks.
RadioShack cut its earnings guidance for the year to $1.60 to $1.80 a share, from $1.60 to $1.90. It expects revenue growth in the low to mid-single-digit percent range, driven by the strength of its mobility platform.
“We expect the softness in our business to continue during the second quarter before we begin to see the benefits of our merchandising and sales initiatives improving both revenue and income trends in the back half of the year,” said president and chief financial officer Jim Gooch. “In addition, growth in our mobility business will be aided by our tablet computer offerings, which are being introduced this month.”
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