ISI Concerned About RadioShack

In a research report released today, ISI expressed several concerns about RadioShack's

future, including gross margin dollars falling in the future. “RSH's quest for relevancy can accept lower margins, but without improvement in traffic, operating margins are likely to continue to fall. Gross margin $s fell $55mn in Q4 (or 622bps of margin rate decline) due to a shift towards lower margin smartphones generally and iPhones in particular, combined with the overall mix shift towards mobility through the TGT kiosk rollout. Apple's iconic product offerings have not stemmed traffic declines, but are taking gross margin rates lower by 300-350bps. We estimate that the TGT rollout lowered rates by 200-250bps and promotions added 50-100bps of gross margin pressure,” ISI revealed in the report. ISI maintains its Hold rating and $6 PT on RadioShack, which closed yesterday at $7.26.