RadioShack shares plunge on preliminary earnings
Fort Worth-based electronics retailer RadioShack said Monday it expects to earn between 11 and 13 cents a share, a fraction of the 37 cents Wall Street was expecting for the fourth quarter and the 51 cents a share it reported a year earlier. The news was disclosed just after the close of regular trading on the New York Stock Exchange, but the company's shares (ticker: RSH) were down about 18 percent in after-hours trading. RadioShack said it will report its final earnings on Feb. 21.
In its preliminary earnings statement, RadioShack said it expects revenues to rise about 6 percent to %$1.39 billion, with sales up 2 percent at stores open at least a year, an important performance measure for retailers. But its gross profit margin slipped tp 35 percent in the fourth quarter, compared to 41 percent a year earlier. It said the narrower margin reflected a sales shift to lower-margin smartphones and mobile devices, a more promotional holiday selling season and more mobility sales due to its growth of operations in Target stores. Overall, the results "are due in large part to the underperformance of the Spring postpaid wireless business and reflect further unanticipated changes in Sprint's custom and credit models," RadioShack said.
CEO Jim Gooch said RadioShack expects 2012 net profit to be down from 2011, especially in the first quarter. He said the company also suspended share buybacks for the near term but will continue to pay a quarterly dividend.
-- Jim Fuquay