RadioShack Announces 88% Earnings Miss In Report

RadioShack RSH shares are ready to slump lower following a large earnings miss Tuesday morning.

Revenue for the first quarter was 4.01 percent below the analyst consensus at $736.7 million versus $767.45 million. Year over year, earnings are down 13.2 percent, led by store closings and a 14 percent drop in comparable sales. RadioShack expects to close up to an additional 178 stores.

Earnings slumped to a $0.98 loss per share, versus the $0.52 drop expected by Wall Street; this is an 88.5 percent miss. Earnings are down 180 percent year over year. The accelerated drop in income is in part due to cost of goods sold as a percentage of sales rising to 63.5 percent versus 59.8 percent. Selling, general and administrative costs actually rose, despite the downturn in revenue.

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The balance sheet is not not in too bad of shape. The current ratio is 2.36 and there was $61.8 million on the balance sheet.

In the press release, CEO Joseph Magnacca emphasised that the company is making progress on its turnaround, but, “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.” Most importantly, Magnacca emphasised that Radio Shack’s concept stores have been growing quickly and that the company has begun is 100 store remodeling effort.

Shares of RadioShack are currently trading down 15.58 percent to $1.30 in Tuesday’s premarket.Volume has been light, indicated that as reversal, or more selling, is possible.