RadioShack CEO voices optimism despite wider quarterly loss

Posted Tuesday, Apr. 23, 2013  comments  Print Reprints
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Sales at RadioShack dropped 7 percent in its first quarter and its net loss widened to $43 million from $8 million a year ago, including $8.5 million of red ink from closing phone kioskis in Target stores, the company said today.

Still, the Fort Worth-based retailer's stock rose nearly 4 percent in morning trading, to $3.26 a share, apparently buoyed by promises of sweeping changes to "jumpstart our powerful brand" from the new CEO, Joseph C. Magnacca.

"I believe in this brand. I am confident that we can renew its relevancy and expand the loyal customer base that chooses to shop with us every day," said the Canadian-born Magnacca, formerly an executive with Walgreen. "We are building a compelling long-term strategic vision and plan that plays to our strengths and is centered around the customer."

Aside from hiring a new chief marketing officer and an executive in charge of "store concepts" last week, the CEO said he has begun implementing priorities to achieve a turnaround by remodeling stores in the strategic New York market in the next few weeks.

"We are rolling out a new brand image, and you will start seeing changes in our branding and advertising soon," Magnacca said in a statement released with the dismal quarterly results.

Rattling off the chain's strengths, he said: "We have a powerful brand that has stood the test of time over nine decades and has a large, loyal customer following. We have strong relationships with leading vendors and a portfolio of trusted private brands that offer highly innovative technology products. We have a vast network of more than 4,300 company-operated stores and approximately 1,000 dealer outlets across the U.S." In addition, RadioShack has a presence in more than 25 countries, including 270 company-operated stores in Mexico.

Amid the poor quarterly results, RadioShack saw some good news. Excluding postpaid wireless sales, hurt by higher-priced smartphones, gross margins on merchandise actually improved, it said.

Total net sales were $849 million, compared to $913 million last year. Sales at stores open at least a year, a key retail statistic, were down 5.7 percent. But RadioShack noted that its "signature" platform format outlets generated their fifth consecutive quarter of sales growth among U.S. company-operated stores.

The loss per share of 35 cents, compared with an 8-cents-pere-share loss last year, significantly more than the 11 cents loss estimated by analysts.

Magnacca also said that the turnaround effort will include changes with its online and mobile channels "so our customers receive a compelling, continuous and seamless experience however and whenever they shop with us.

"So, we're making good progress and the 100-day plan is on track," he said, referring to his initial announcement that he would release a strategy after 100 days as CEO.

"We believe there is an opportunity to drive sales growth over time in each of our platforms: mobility, signature and consumer electronics. The pace of our initiatives will vary, but each of the initiatives will contribute to bringing RadioShack back to the forefront of our customers' minds and to improving our financial performance and profitability."

Barry Shlachter, 817-390-7718

Twitter: @bshlachter

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