The chain has been struggling to deal with a couple of major hits in the past few months including a switch in its wireless phone service providers, which has hurt sales of the products, and the unexpected resignation of ehief executive David Edmondson.
During the first quarter, profits plunged 85% due to weak wireless sales and inventory write-downs. Earnings fell to $8.4 million, or 6 cents per share, from $55 million, or 34 cents per share, for the same period last year. The poor first-quarter performance follows an equally disappointing fourth quarter during which earnings dropped 62%.
For the first quarter, analysts were expecting profit of 18 cents per share and sales of $1.13 billion, according to Reuters Estimates. The chain actually outperformed expectations with sales of $1.16 billion, a 3% increase.
However, RadioShack's comparable store sales for the first quarter were down 1%. "Wireless sales, in particular, were below our expectations and helped contribute to overall financials that were disappointing," said interim president and CEO Claire Babrowski during the earnings call.
"While we knew first quarter would be weak, the results are worse than we anticipated," said Babrowski. "We clearly have a lot more work to do to get this company back to levels of profitability which we all expect." She expressed confidence in the chain's turnaround plan, which includes liquidation of slow moving inventory. The liquidation is supposed to be completed by the end of August.
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