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RadioShack predicts earnings drop in Q4

FORT WORTH, Texas — RadioShack announced that preliminary net sales and operating revenues for the fourth quarter ended Dec. 31, 2011 increased approximately 6% to $1.39 billion compared with $1.31 billion for the fourth quarter last year. Comparable-store sales for company-operated stores increased approximately 2% during the 2011 fourth quarter.

The company said it expects diluted earnings per share for the 2011 fourth quarter to be in the range of 11 cents to 13 cents, compared with 51 cents per diluted share reported in the 2010 fourth quarter.

According to RadioShack, the expected drop in earnings is due in large part to the underperformance of the Sprint postpaid wireless business and reflect further unanticipated changes in Sprint's customer and credit models. These changes resulted in fewer new and upgrade activations and a decline in Sprint postpaid revenues in the fourth quarter compared to the 2010 fourth quarter and compared to third quarter 2011. In addition, fourth-quarter results reflect a highly promotional holiday season and ongoing pressures on consumer spending.

"Our transition continues as we work to maximize our mobility business opportunities, particularly now that our assortment includes the top three national wireless carriers," said Jim Gooch, president and chief executive officer.  "In that regard, we continue to make progress in the mobility sector with growth in sales of new iconic handsets, incremental sales growth from new partner Verizon Wireless, higher revenues from AT&T, and higher sales of tablets and e-readers.  However, we are disappointed that these positives were overshadowed by significant declines in our Sprint business.  

"We recognize that certain smartphones and other mobile devices, mainly tablets and e-readers, are a growing mainstay of consumer electronics purchases, and are significantly changing the margin profile of our mobility business.  With this in mind, we are resetting our business expectations for 2012.  We remain confident in the health of our business absent the Sprint impacts and in the progress we have made on initiatives put into place in 2011. Our plan in 2012 is to build on this progress.  Our key initiatives include strengthening our relationships with our wireless carrier partners as we continue to grow our mobility business, make further enhancements to our store and online experience, and optimize our overall selling and merchandising strategy."

RadioShack said it expects to report final, audited 2011 fourth-quarter and full-year financial results on Feb. 21, before the open of trading on the New York Stock Exchange. 

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