4/24/2014

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Business

RadioShack loss widens, chief finance officer leaves

RadioShack loss widens, chief finance officer leaves
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FORT WORTH, Texas (AP) - RadioShack said Tuesday that its second-quarter loss widened as the struggling electronics retailer works to turn around results.

Although the loss was bigger than analysts expected, revenue handily beat expectations and the company said it was bringing on consultants to help improve results.

Shares rose almost 10 percent to $3.22 in premarket trading. The stock has traded between $1.90 and $4.28 over the past 52 weeks

The company said its CFO Dorvin Lively is leaving the company and confirmed it is working with business advisory firm AlixPartners and investment banking firm Peter J. Solomon Co. to turn around results. AlixPartners managing director Holly F. Etlin will serve as interim CFO.

RadioShack has been cutting costs, shuffling management and revamping stores and product selection to battle back against tough competition from online retailers and discount stores that have expanded their electronics offerings.

Under CEO Joe Magnacca, who came aboard in February, the company is also revamping 5 percent of the company's 4,400 stores to make them airier and less cluttered with more customer-friendly displays.

"We made progress on the initiatives we outlined last quarter in repositioning our branding, opening a new concept store, streamlining our product assortment, and entering new strategic partnerships," Magnacca said in a statement.

The investments seem to be helping sales: Revenue was nearly flat at $844.5 million, handily beating analysts' expectations of revenue of $816.1 million, according to FactSet. And revenue in stores open at least one year rose 1.3 percent, the first increase in that metric since 2010. Revenue in stores open at least one year is a key retail metric because it excludes stores that open or close during the year.

But the investments are taking a heavy toll on profitability. Net loss for the three months ended June 30 totaled $53.1 million, or 53 cents per share. That compares with a net loss of $21 million, or 21 cents per share last year. The loss is more than double the loss of 24 cents per share that analysts expected.

Magnacca conceded that profitability was "not where we would have liked." But he said that the quarter was designed to clear out unproductive inventory and test markdowns and discounts to help improve promotions going forward.

"Looking ahead, we expect the turnaround to take several quarters, and during that time our results may vary from quarter to quarter as we make strategic changes to improve our long-term financial performance," he said.

RadioShack said it ended the quarter with total liquidity of $818 million, with total debt of $713 million at June 30.
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