RadioShack (RSH) posted a mixed third quarter and trimmed full-year guidance, citing falling profit margins.The Fort Worth, Texas, electronics retailer made $109 million, or 75 cents a share, in the quarter ended Sept. 30, up from the year-ago $70 million, or 43 cents a share. Revenue rose 8% from a year ago to $1.19 billion. But the latest-quarter gain was driven by a benefit of $57 million, or 39 cents a share, from reversal of a tax contingency reserve. Excluding that number, the third quarter profit fell from a year ago and came up a penny shy of the Wall Street analyst consensus estimate. Same-store sales rose 1% from a year ago, and gross margin dropped by 300 basis points as the company used clearance sales to move inventory. "We made important progress during the third quarter to better position ourselves for the holiday selling season and the long term," said CEO David Edmondson. "We made aggressive moves on inventory and finished deploying operating procedures which will improve the customer experience in our stores. We also finalized long-term wireless agreements and returned value to shareholders through an overnight share repurchase transaction which better positions us as a corporation." RadioShack also trimmed fourth-quarter guidance, saying it expects to make about $2.19 a share for the year, including the tax benefit, which the company without explanation put at 38 cents a share for the year vs. 39 cents for the third quarter. Analysts surveyed by Thomson First Call were looking for 2005 earnings of $1.86 a share, excluding the tax benefit, which is about a nickel better than the company's forecast. RadioShack's projection points to a fourth-quarter profit of around 78 cents a share, against the 84-cent Thomson First Call target. "Our outlook for the fourth quarter reflects accelerated comparable store sales driven primarily by rapidly growing categories which tend to carry lower gross margins than the company average," Edmondson said. In addition, RadioShack expects 2005 free cash flow of $80 million to $100 million. The figures are lower than those projected earlier this year due primarily to new expectations for changes in inventory. Early Friday, RadioShack was flat at $23.64.