FORT WORTH, Texas – RadioShack’s first-quarter loss widened as it struggles to turn around results under new CEO Joseph Magnacca.
RadioShack has been trying to reverse years of slumping sales amid tough competition, as more consumers buy electronics from online merchants like Amazon, and discounters expand their own electronics offerings. RadioShack has also been dealing with weaker demand for its mobile phones and phone plans.
Magnacca, a former Walgreen Co. executive hired in February, has brought on a new chief marketing officer and a new senior vice-president of store concepts, as the company tries to win back customers who have strayed. Magnacca stepped in after James Gooch left in September after only a year and a half on the job.
But the task of reviving RadioShack remains difficult. The Fort Worth, Texas, company’s loss, reported Tuesday, was deeper than Wall Street analysts had predicted. The 7 per cent decline in its revenue was also worse than they had estimated.
S&P Capital IQ lowered its opinion on the company’s shares to “Sell” from “Hold” due to weak margins — the amount of each dollar in revenue a company actually keeps — in its wireless business and increasing competition from online retailers and discounters.
RadioShack has to do something to head off falling revenue in established stores, which declined 5.7 per cent this quarter from a year ago. That is a troubling sign for any retailer as the measurement removes the volatility of results from stores that were recently opened or closed. It provides a peek at the overall health of a brand.
Magnacca said work to revamp stores and revive the brand will start within weeks as the company struggles to fend off further raids on customers from online retailers.
“I know we have some gaps and improvements that need to take place,” Magnacca said. “We are rolling out a new brand image, and you will start seeing changes in our branding and advertising soon. For our physical stores, work is underway and will begin with remodeling strategic New York City locations with a new look and feel over the next few weeks.”
Janney Capital Markets analyst David Strasser said the quarter was “a disaster by any stretch of the imagination,” but said he also saw a silver lining with Magnacca. He pointed to Magnacca’s experience at Walgreen, where he revamped merchandise at the Duane Reade chain.
“Those stores have gone from the ugly stepchild of drug stores, to the best merchandised drug stores in New York City, if not the country,” he said.
For the January-to-March quarter, RadioShack’s loss amounted to $43.3 million, or 43 cents per share, compared with a loss of $8 million, or 8 cents per share, in the same quarter last year. Excluding losses from the company’s Target mobile centres, which all closed by the end of the quarter, RadioShack’s loss amounted to 35 cents per share.
Wall Street was looking for a loss of 11 cents per share and revenue of $962.3 million, according to a poll by FactSet.
Shares of RadioShack Corp. rose 2 cents to $3.16 in late afternoon trading, near the middle of its 52-week trading range of $1.90 to $6.14. The stock has jumped about 49 per cent in 2013. But over the past 12 months, it’s still off 47 per cent.