Dismal 4Q for RadioShack - Analyst Blog
RadioShack Corp. ( RSH ) gave yet another disappointing performance in the fourth quarter of 2012, falling much below the Zacks Consensus Estimates. The comparable store sales for the company-operated stores and kiosks (stores and kiosks that have been operational for at least a year) were down 7% in the reported quarter. This is a key retail performance indicator measuring growth from the existing sales locations.
GAAP net loss in the fourth quarter was $63.3 million or a loss of 63 cents per share compared to a net income of $11.9 million or 12 cents per share in the year-ago quarter. The reported loss was nowhere near the Zacks Consensus Estimate of a loss of 3 cents. Net revenue was $1,296.1 million, down 6.5% year over year and well below the Zacks Consensus Estimate of $1,368 million.
Quarterly gross profit was $447.1 million compared with $482.4 million in the prior-year quarter. Gross margin was 34% compared with 35% in the prior-year quarter. This was mainly due to an unfavorable sales mix with lower margin smartphones coupled with the decline in post-paid wireless handsets sold.
Selling, general, and administrative expenses were $408.6 million compared with $431.1 million in the year-ago quarter. Operating income was $17.3 million compared with $30.5 million in the year-ago quarter.
During 2012, RadioShack generated $43 million in cash from operations compared with $217.9 million in 2011. Free cash flow (cash flow from operations less capital expenditures) was a negative $24.8 million compared with a positive $135.8 million in 2011.
At the year-end, RadioShack had $535.71 million in cash & cash equivalent compared with $591.7 million at the end of 2011. Total debt, at the end of 2012 was $777.7 million compared with $670.6 million at the end of 2011. Debt-to-capitalization ratio was 0.45 compared with 0.47 at the prior-year end.
U.S. RadioShack Company-operated store segment, which is the prime contributor to the total revenue, was down 7.8% year over year at $1,036.1 million. Operating income was $112.3 million, down 22.8% year over year.
Target Mobile Centers segment revenue was down 12.6% year over year at $124.7 million. Operating income was $0.7 million compared with an operating loss of $6.9 million in the year-ago quarter.
Other revenue increased 12.6% year over year to $135.3 million. Operating income was $12 million, up 15.4% year over year.
Other Stocks to Consider
RadioShack currently has a Zacks Rank #2 (Buy). Other stocks to consider in the Electronics retail industry include Best Buy Co. Inc. ( BBY ), Conns Inc. ( CONN ) and Target Corp. ( TGT ). While Conns currently has a Zacks Rank #2 (Buy), both Best Buy and Target carries a Zacks Rank #3 (Hold).
BEST BUY (BBY): Free Stock Analysis Report
CONNS INC (CONN): Free Stock Analysis Report
RADIOSHACK CORP (RSH): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
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