RSH: Radio Shack Getting Its Act Together?

We’ve heard about the Business Week indicator, but now that Radio Shack (RSH) reported earnings we may have to devise an Onion indicator.

RadioShack Corporation (NYSE: RSH) today announced net income of $42.5 million or $0.31 per diluted share for the quarter ended March 31, 2007 versus net income of $8.4 million or $0.06 per diluted share for the quarter ended March 31, 2006. First quarter net income was favorably impacted by improved gross margin, a reduction in selling, general and administrative (SG&A) expenses and an increase in interest income when compared to the prior year period.

The results for the quarter were impacted by two unusual items. The negative impact of costs related to employee separations included in SG&A expenses ($8.5 million pre-tax) was more than offset by an increase to gross profit ($14.0 million pre-tax) associated with the recapture of federal telecommunications excise tax. The prior year period’s results included a charge for impairment of fixed assets which reduced the company’s 2006 first quarter pre-tax income by $8.9 million. The items noted above increased earnings per share in the March 2007 quarter by $0.02 and decreased earnings per share in the March 2006 quarter by $0.04.

Analysts were expecting the company to earn $0.14 on $1.04 billion in sales. While the earnings were better than expected due to the margin improvements, the sales did not live up to expectations.

First quarter 2007 comparable store sales were down 9.2% versus the prior year. Total sales decreased in the first quarter of 2007 to $992 million, down 14.5%, from total sales of $1,160 million for the previous year. The declines in the postpaid wireless business continue to impact both the comparable store and total sales results. In addition, total sales were impacted by 506 fewer company-operated stores and kiosks when compared to last year.

Apparently, when companies reach the point of parody things may be as good or as bad as they are going to get.

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5 Comments on “RSH: Radio Shack Getting Its Act Together?”

  1. [...] RSH: Radio Shack Getting Its Act Together? [...]

  2. Norman Hopkins

    Maybe for a little while Charles Tandy can stop turning over in his grave. His lesson was always “You have to have gross profit going in to have net profit coming out”.

  3. Trent

    Always good advice – though I’m sure there are some creative accounting/financial people who could find a way.

  4. Onion indicator

    Think how much better it would have been without “The negative impact of costs related to employee separations included in SG&A expenses ($8.5 million pre-tax)”. Especially since they must have known that they were going to get “an increase to gross profit ($14.0 million pre-tax) associated with the recapture of federal telecommunications excise tax.”
    You may have meant to say ‘parity’, but phrasing it as “the point of parody” is a pretty apt description of RSH – now a mere parody of it’s former “American Icon” status.

  5. Trent

    No, the Onion article is definitely parody, not parity. Thanks for the interest!

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