RadioShack Reports Major Losses
Published: Friday, November 9, 2012
Updated: Tuesday, November 20, 2012 17:11
RadioShack Corporation, the Fort Worth-based consumer electronics retailer, reported Tuesday that its losses mounted in the third quarter as its mobile phone sales saw a continued decline in margin performance.
Dorvin Lively, interim chief executive officer, said in the third quarter earnings release that the business performed below expectations.
RadioShack lost more this quarter than it did for the first and second quarters combined.
For the three months ended Sept. 30, the company reported a net loss of $47 million, or $0.47 per share. Excluding one-time charges, the net loss would have been $33 million, or $0.33 per share. The company had already lost $29 million in the first half. In 2011, RadioShack’s third quarter results were nearly break-even, with net income of $0.3 million.
Total revenue for the third quarter was $1.00 billion, which was slightly lower than the $1.03 billion in revenue reported for the third quarter in 2011.
RadioShack doesn’t make much money off of cell phones, its largest sales focus, in comparison to other electronic goods. Liang Feng, an analyst at Morningstar, said that RadioShack “is now being more sensitive about the pricing so they’re not labeled as a showroom for Amazon.” If RadioShack can’t compete with the low prices offered by companies like Amazon.com, then it will lose more customers to these online retailers. Also, being forced to cut prices effects the margin RadioShack is able to take.
One way RadioShack is trying to combat its issues is to bring down its costs, which it did by $11 million, or 3 percent, versus the same quarter in the prior year. The company has also completed $175 million of new financing.
“Going forward, we will continue to be focused on stabilizing the profitability of our business,” Lively said in the press release. “The key to this effort is the gross margin and profitability of our mobility business and more specifically our post-paid business.”
Amidst the bad news, RadioShack’s stock closed the day Tuesday with a 0.07 percent increase, coming in at $2.57.