RadioShack Tumbles in 1Q

Zacks

RadioShack Corp. (RSH) posted highly disappointing first-quarter 2013 financial results, which fell below the Zacks Consensus Estimates. This somber condition is mainly attributed to weakness in the company’s postpaid wireless business.

The comparable store sales for the company-operated stores and kiosks (stores and kiosks that have been operational for at least a year) were down 5.7% in the reported quarter. This is a key retail performance indicator measuring growth from the existing sales locations.

GAAP net loss from continuing operations in first-quarter 2013 was $34.8 million or a loss of 35 cents per share compared with a net loss of $4.7 million or 5 cents per share in the year-ago quarter. Quarterly loss per share of 35 cents was significantly higher than the Zacks Consensus Estimate of a loss per share of 11 cents.  Net revenue was $849 million, down 7% year over year and also fell below the Zacks Consensus Estimate of $952 million.

Quarterly gross profit was $337.3 million compared with $370.1 million in the prior-year quarter. Gross margin was 39.7% compared with 40.5% in the prior-year quarter. This was mainly due to an unfavorable sales mix with lower margin smartphones coupled with the decline in the sale of post-paid wireless handsets sold.

Selling, general, and administrative expenses were $337.9 million compared with $345.3 million in the year-ago quarter. Operating loss was $18.5 million compared with an operating income of $7.1 million in the year-ago quarter.

During the first quarter of 2013, RadioShack generated $16.9 million in cash from operations compared with $48.5 million in the year-ago quarter. Free cash flow (cash flow from operations less capital expenditures) was $11.8 million compared with $37.3 million in the prior-year quarter.

At the end of the first quarter of 2013, RadioShack had $434.9 million in cash & cash equivalent compared with $537.5 million at the end of 2012. Total debt, at the end of the reported quarter was $711.9 million compared with $777.7 million at the end of 2012. Debt-to-capitalization ratio was 0.47 compared with 0.45 at the end of 2012.

Segment Results

U.S. RadioShack Company-operated store segment, which is the prime contributor to the total revenue, was down 7.6% year over year to $770.1 million. Operating income was $61.2 million, down 33% year over year. Other segment revenue decreased 1% year over year to $78.9 million. Operating income was $8.3 million, remaining same year over year.

Other Stocks to Consider

RadioShack currently has a Zacks Rank #3 (Hold). Other stocks to consider in the retail industry include hhgregg Inc. (HGG), Conns Inc. (CONN) and Costco Wholesale Corp. (COST). While Conns currently has a Zacks Rank #1 (Strong Buy), both Costco and hhgregg carry a Zacks Rank #2 (Buy). 

Read the Full Research Report on RSH

Read the Full Research Report on COST

Read the Full Research Report on HGG

Read the Full Research Report on CONN

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