RadioShack (NYSE:RSH) Corp is a well-known American franchise for electronics retail stores all across US as well as Europe, South America and Africa. The company announced its third quarter earnings for the year on Thursday. According to the posting, the firm’s adjusted net earnings per share stands at a loss of $1.23, on $650.2 million worth of revenue. Last year for the same period, the EPS loss was of $0.90 and revenue was $775.4 million. According to predictions by the Thomas Reuters, EPS loss was expected at $1.04 along with $717.03 million in revenue. So the company has not just gone below last year’s performance, but it also managed to prove itself as a complete train wreck when analyzing estimates.
The gross profit fell by 11% and sales were down by 16%. According to the firm’s CEO these falling numbers represented challenges faced in the postpaid mobility sphere. It seems that RadioShack (NYSE:RSH) can’t make any progress in smartphones and tablets, and is expected to sink, eventually. To minimize the effect of the failure, CEO Joseph Magnacca played up the small successes. He reported that other spheres of the business only saw a loss of 2% sales as compared to last year. The previous quarter showed improvement in attaining high profit margins for private brand and innovative new programs like “Fix it Here”. Another area that saw success was the core network of “Interactive Remodel” stores, which performed 12% higher than the total chain, and the retail segment was up by 15%. In the holiday season however, the sales boost up by 35% for the retail segment whereas the mobility segment was down by 27%.
According to internal sources, Magnacca and RadioShack (NYSE:RSH) have plans to pull off a turn around and cut costs in terms of closing down stores. But the company statistics already show that cost cutting has taken place. Amongst major cut-outs, $400 million worth are cut out from the annual costs, $105 million were deducted from the marketing budget, another $100 million were cut out from operations and regional management and $90 million were incurred through store closures. Other cost cutting techniques will be corporate savings, professional fees and by lowering store overhead.
Even though the plan seems worth a try, it is a little too late for those amendments. For its first three quarters for the year, RadioShack (NYSE:RSH) losses totaled to a hefty amount of $397 million, and the plans to save up to $400 million in the coming year just don’t sound very promising.
This news hasn’t worked very well with the investors either, who were not happy after its release on Thursday morning, which further pushed the stock down by another 4% in premarket trading to $0.53, with the 52 week range between $0.54 to $2.92. The Thomas Reuters prediction of the price target said $0.58 before the report release.
The company finds itself in quite a chaos and is looking at some drastic strategies that might save face in the market.