DOW JONES NEWSWIRES
RadioShack Corp.'s (RSH) fourth-quarter net income dropped a
bigger-than-expected 39% on falling margins, consumers shifting
away from higher-margin cellphone activations and weak sales of
some product categories.
Retailers have struggled with falling sales and tighter credit
conditions, and the holiday sales season last year was one of the
worst on record. Still, consumer-electronic chains including Best
Buy Co. (BBY) and RadioShack could profit in the long run after
Circuit City Stores Inc. (CCTYQ) announced last month it would
liquidate its assets.
RadioShack reported net income of $62 million, or 50 cents a
share, down from $101 million, or 77 cents a share, a year
earlier.
Revenue dropped 7.7% to $1.26 billion as same-store sales fell
9.2%, hurt by weak results for items ranging from global
positioning systems to memory players. Strong sales of digital
converter boxes, postpaid wireless and flat-panel televisions
partially offset the decline.
Analysts polled by Thomson Reuters expected per-share earnings
of 73 cents on revenue of $1.38 billion.
Gross margin fell to 41.8% from 44.8% amid holiday markdowns and
a shift in wireless business away from more-profitable new
activations to lower-margin upgrades.
Capital expenditures totaled $85.6 million in 2008. The company
estimates capital expenditures for 2009 to be $75 million to $100
million.
RadioShack is testing a specialty store concept focused on
wireless devices and services, which some analysts say is a bid to
capture more high-end sales and compete against Best Buy. The
effort could help boost sales in the company's biggest segment, as
a third of Radioshack's sales are generated by wireless phones and
plans.
Shares closed Monday at $10.82 and were inactive in premarket
trading. The company's stock has lost 44% of its value from
September.
-By John Kell and Kerry E. Grace, Dow Jones Newswires;
201-938-5089; kerry.grace@dowjones.com