Despite a less than stellar report card for its fiscal first quarter ending May 3, 2014, along with a downward trend of uninspiring financial results, RadioShack Corp. is forging ahead with its turnaround strategy focused on enhancing the customer experience everywhere possible.
RadioShack’s first-quarter revenue dropped 13%, to $736.7 million. The mobility platform sales fell 19%, and its retail platform decreased more than 9%.
RadioShack CEO, Joseph C. Magnacca, said during the company’s June 10 first-quarter earnings conference call that the 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. 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.”
But Magnacca quickly pointed out the company’s hopeful turnaround strategy.
“Even in this environment, we are making progress on our turnaround strategy,” he said. “We are building the pipeline of new products that will bring differentiation and newness to our stores in the form of high-margin private brand and exclusive items, including those from new partnerships like Quirky and PCH.”
Magnacca said the company’s concept stores continue to drive strong sales growth.
“We have begun to execute our 100-store remodel program to scale the successful components of our concept stores across our network,” he added. “We have continued to drive our new ‘Do It Together’ brand campaign, which highlights one of our greatest strengths, our store associates and the knowledge and solutions they provide to our customers every day. 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. Our entire team is focused on executing our vision, adapting to the environment, managing our balance sheet, and driving sustainable change.”
Consolidated gross profit was $268.7 million, or 36.5% of net sales, compared with $340.9 million last year, or 40.2% of net sales. The decline in gross profit and gross margin rate was primarily driven by aggressive price competition in RadioShack’s current postpaid and prepaid handset offerings.
Consolidated selling, general and administrative (SG&A) expenses were $335.9 million, or 45.6% of net sales, compared with $333.7 million last year, or 39.3% of net sales. This represents a 6.3 percentage point increase as a percentage of net sales and operating revenues for the 13 weeks ended May 3, 2014, which was driven by declining sales volumes period over period. The three months ended April 30, 2013, included a gain on the sale of a building of $2.4 million.
RadioShack closed 22 stores in fiscal 2015 and expects to close up to 200 stores which will be selected based on location, area demographics, lease life, and financial performance.