Electronics retailer RadioShack Corp. (RSH) reported financial results from the fourth quarter that were way worse than analysts expected, putting the stock price in a tailspin. The embattled company, struggling to halt a string of widening losses, said after putting its operations under a microscope that it has decided it will be shuttering underperforming locations, equaling about 20 percent of its stores.
For the quarter ended December 31, 2013, the Fort Worth, Texas-based company reported total net sales and operating revenue of $935.4 million, down from $1.17 billion in the year prior quarter. Net loss for the quarter expanded to $191.4 million, or $1.90 per share, from $63.3 million, or 63 cents per share, in the fourth quarter of 2012. Excluding one-time items, adjusted net loss was $1.29 per share, versus a net profit of 7 cents per share in the year earlier period.
Wall Street was expecting a net loss of only 15 cents per share on sales of $1.12 billion.
RadioShack stumbled during the critical holiday season with worse numbers across the board. Same-store sales, a key measure of a company’s health comparing sales at stores open more than one year, declined 19 percent. The company cited lower store traffic, intense promotions by competition, a soft market for mobile products and “a few” operational issues.
Consolidated gross profit fell to $278.4 million, or 29.8 percent of sales, compared to $419.3 million, or 35.8 percent of sales, in Q4 2012. Selling, general and administrative costs were 41.6 percent of net sales, up from 32.7 percent of sales last year.
The turnaround has been sluggish since RadioShack brought in Joseph C. Magnacca as CEO last February. Magnacca has been working to replace stale product on the shelves with higher margin items and rebrand the company with a fresh image (including a new logo) that will have more appeal to the younger generation and mobile phone shoppers, while still keeping its core group of do-it-yourself-electronics customers.
"Our focus on the brand, our operations, and the in-store experience has been unfolding in parallel with a strategic review of our store footprint,” said Magnacca in a prepared statement this morning.
The review resulted in RadioShack deciding to close 1,100 of its stores, leaving it with about 4,200 company-owned locations in the United States. There are also 274 RadioShack-owned stores in Mexico and about 950 dealer and other outlets globally.
For all of 2013, sales faded to $3.43 billion, compared to $3.83 billion in 2012. Sales at comparable stores were off by 8.8 percent. Adjusted net loss in 2013 was $305.8 million, against a net loss of $60.5 million a year earlier.
RadioShack raised some cash during the quarter to end the year with total liquidity of $554.3 million, but given the weakness to end the year, analysts are wondering if anything can save the iconic brand.
Shares lost nearly a quarter of their value following the release, but have eked back upward to $2.35 in early afternoon action for a loss of 13.7 percent so far on the day.