RadioShack (RSH) Posts Q3 Loss of $1.58/Share; Comps Fell 13.4%

RadioShack (NYSE: RSH) reported Q3 EPS of ($1.58), $0.57 worse than the analyst estimate of ($1.01). Revenue for the quarter came in at $650.2 million versus the consensus estimate of $718.4 million.

Comparable store sales were down 13.4% driven by traffic declines and soft performance particularly in the mobility business.

On an adjusted basis, loss from continuing operations was $125.3 million, which included write-off of fees in connection the debt extinguishment of $28.1 million, which compares to an adjusted loss from continuing operations of $91.1 million last year, which included inventory assortment adjustments of $47.0 million.

The Company ended the quarter with total liquidity of $62.6 million at November 1, 2014, including $43.3 million in cash and cash equivalents and $19.3 million of availability under our 2018 Credit Agreement. This availability is net of letters of credit totaling $94.4 million and $233.9 million in borrowings outstanding at November 1, 2014. The Company's total debt was $841.5 million at November 1, 2014.

Joseph C. Magnacca, chief executive officer, said, "Overall our sales for the quarter declined 16.1 percent year over year, including a comparable store sales decline of 13.4 percent. This primarily reflected challenges in the postpaid mobility business. However, in our retail segment, the other half of our business, comparable store sales at U.S. company-operated stores were only down 2.0 percent compared to last year, and improved throughout the quarter as we focused on higher margin products, including private brand, and innovative new programs like Fix It Here. Moreover, our core network of "Interactive Remodel" stores collectively performed 12 percentage points better than the total chain on a comparable basis, and in the retail segment performed almost 15 percentage points better on a comparable basis.

"We have also begun a detailed set of cost reduction initiatives designed to enhance earnings by over $400 million annually, encompassing a range of operating cost reductions related to headquarters, field, stores, and store support to improve operational efficiency and right-size our business, as well as the benefit of targeted store closures. A slide detailing the impact of these initiatives is available on our investor relations web site under the event details page for today's conference call.

"In addition, over the three-day Thanksgiving holiday, comparable store sales in our U.S. corporate stores were up 35 percent for our retail segment, while mobility was down 27 percent. It is notable that our core retail efforts are working, even as our mobility category is still experiencing challenges."

Mr. Magnacca concluded, "We are focused on three overarching operational imperatives: 1) reducing costs to end our negative cash flow, 2) driving growth and profitability through our retail platform, and 3) returning to a healthy mobility business that, while much smaller in terms of revenues than in recent years, will be substantially more profitable than our recent results."

For earnings history and earnings-related data on RadioShack (RSH) click here.

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