The nightmare of
) persists as the company continues with its disappointing
performance. The company's third-quarter 2012 financial results
were well below the Zacks Consensus Estimates. RadioShack has
achieved its target of securing $175 million worth of new
financing at a blended interest rate of approximately 9%. This
fund will be used to refinance half of its convertible bonds
worth $375 billion, which will mature in August 2013.
GAAP net loss from continuing operation, in the third quarter
of 2012, was $47.1 million or a loss of 47 cents per share
compared to a net income of $0.3 million or 0 cent per share in
the year-ago quarter. Quarterly earnings per share of a loss of
33 cents were nowhere near the Zacks Consensus Estimate of a loss
of 17 cents. Quarterly net revenue was $1000.2 million, down
3.06% year over year and well below the Zacks Consensus Estimate
of $1040 million.
Quarterly gross profit was $359.9 million compared with $441.9
million in the prior-year quarter. Gross margin was 36% in the
reported quarter compared with 42.8% in the prior-year quarter.
This was mainly due to unfavorable sales mix toward lower margin
smartphones coupled with decline in post paid units sold.
Quarterly Selling, General, and Administrative expenses were
$384.6 million compared with $411.4 million in the year-ago
quarter. Operating loss in the third quarter of 2012 was $58.8
million compared to an operating income of $10.6 million in the
year-ago quarter. The Comparable store sales for the
company-operated stores and kiosks (stores and kiosks opened at
least a year) were down 1.6% in the reported quarter. This is a
key retail performance indicator measuring growth from the
existing sales locations.
During the first nine months of 2012, RadioShack generated
$32.4 million of cash from operations compared with $263 million
in the year-ago period. Free cash flow (cash flow from operations
less capital expenditures) in the first nine months of 2012 was a
negative $12.1 million compared to a positive $200.1 million in
the prior-year period.
At the end of the third quarter of 2012, RadioShack had $546.1
million of cash & cash equivalent compared with $591.7
million at the end of 2011. Total debt, at the end of the
previous quarter was $749.2 million compared with $670.6 million
at the end of 2011. At the end of the third quarter of 2012,
debt-to-capitalization ratio was 0.42 compared with 0.47 at the
end of 2011.
Segment wise Results
U.S. RadioShack Company-operated store
segment, which is the prime contributor of total revenue, was
down 3.8% year over year to $814.4 million. Operating income was
$62.1 million, down 35.0% year over year.
revenue remained flat year over year to $185.8 million. Operating
loss was $15.4 million compared to an operating income of $0.9
million in the prior-year quarter.
Earlier, RadioShack suspended its dividend payment program to
reduce total debt, which in turn, will minimize its
debt-to-equity ratio. However, the company faces stiff
competition from rival
Best Buy Co. Inc.
) and stores operated by mobile phone carriers.
We currently maintain a long-term Underperform recommendation
on RadioShack. However, it holds a short-term Zacks#3 Rank (Hold)
on the stock.
BEST BUY (BBY): Free Stock Analysis Report
RADIOSHACK CORP (RSH): Free Stock Analysis
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