unveiled its latest debacle Friday, missing first-quarter per-share earnings estimates by more than a dime as wireless sales slumped.
The Fort Worth, Texas, electronics retailer made $8 million, or 6 cents a share, for the quarter ended March 31, down from the year-ago $55 million, or 34 cents a share. The latest quarter included a pretax inventory writedown of $10 million. Analysts surveyed by Thomson Financial were looking for a 17-cent per-share profit.
Revenue rose 3% from a year ago to $1.16 billion, in line with the $1.13 billion target. Same-store sales, measuring sales in stores open at least a year, dropped 1% from a year ago, and the gross margin dropped to 48.3% from 50.4% a year earlier as lower-margin kiosk sales increased. Overhead costs rose 10% as store labor hours rose.
"Wireless sales, in particular, were below our expectations and helped contribute to overall financials that were disappointing," said acting chief Claire Babrowski. "While we knew first quarter would be weak, the results are worse than we anticipated. We clearly have a lot more work to do to get this company back to levels of profitability which we all expect. The first quarter results do nothing to change our belief in the turnaround plan announced early this year. We have made progress in implementing the plan, and we continue to be confident we are making the right moves that will benefit RadioShack significantly over time."
RadioShack used $310 million in cash in the first quarter of 2006 vs. a use of $105 million in the first quarter of 2005. This year's use of cash was driven by lower net income and changes in payables and inventory. The company is reiterating its fiscal year 2006 estimated free cash flow guidance of $50 million to $100 million.
The news comes just two months after Babrowski stepped in to replace Dave Edmondson as CEO. Edmondson stepped down following a series of earnings shortfalls and the disclosure that he had inflated educational claims on his resume. Last week, Chairman Len Roberts said he would depart as well next month. RadioShack continues to search for a full-time CEO.