RadioShack Same-Store Sales Plunge, Causing Stock Drop

By Christine Kern, contributing writer

RadioShack has announced that it is closing 1,100 underperforming stores.

Struggling electronics retailer RadioShack suffered drops in its stock prices June 10, after reporting a wider-than-expected first quarter net loss and lower-than-anticipated revenue. The negative territory is a familiar one for the stock, which has plummeted 57% year-over-year and 42% year-to-date thanks to depressed sales figures from the retailer who might not ever successfully emerge from the 80′s.

According to the new quarterly report, RadioShack saw a 13 percent decrease in first quarter revenue, down to $736.7 million from the $848.4 reported in the prior-year. The retailer’s net loss rose to$98.3 million, skyrocketing from their net loss of $28 million a year ago, resulting in a 97-cent per-share loss.  That figure far surpasses any of the predictions of analysts, who forecast a 52-cent per-share loss.

Sales softness has been consistent among electronics retailers, including Best Buy, hhgregg, and Radio Shack.  BestBuy and hhgregg both reported some negative numbers in their most recent quarter thanks to “continued volatility in the consumer electronics business”, and RadioShack reported a 14% same-store sales decline, due to a drop in traffic as well as its mobility business.

“Overall, our first quarter performance was challenged by an industry-wide decline in consumer electronics and a soft mobility market which impacted traffic trends throughout the quarter,” Joseph Magnacca, RadioShack CEO, said in a statement. “In particular, our mobility business was weak due to lackluster consumer interest in the current handset assortment and increased promotional activities across the industry including the wireless carriers. This resulted in disappointing sales and gross margin performance.”

The company closed 22 stores in fiscal 2015 and said it expects to close up to 200 stores that will be selected based on location, area demographics, lease life and financial performance. This is in conflict with its original plan to close 1,100 stores — a plan it originally announced in its fourth quarter earnings report in March, alongside a 20% revenue drop and a 19% same-store sales decline –

According to their financial statements, RadioShack also ended the first quarter with $614.5 million of debt, which will mature between 2018 and 2019.

Magnacca said, “We are also successfully reducing our costs, with a particular focus on removing expenses that do not impact the customer experience, and have taken steps to lower our corporate headcount, leverage technology, and reduce discretionary expenses.”