FORT WORTH Tex.—RadioShack Corp. announced a “turnaround” effort that includes the company shutting down between 400 and 700 company stores. The announcement came as RadioShack reported sluggish fourth-quarter results that were hampered by wireless sales that came in below forecasts.
The news appeared to anger investors, who sent the company’s stock down almost 8 percent in trading to around $19.21 per share.
“Sales results were good in many low-margin non-wireless categories; however, we experienced lower sales in high-margin categories. In addition wireless sales and profits were below our expectations,” said David Edmondson, president and chief executive officer for RadioShack. Edmondson is currently embroiled in a scandal over misstatements he made about his educational background. RadioShack’s board is currently evaluating the situation.
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In the fourth quarter, RadioShack’s net income plunged 62 percent from last year’s fourth quarter, while diluted earnings per share fell from 81 cents to 36 cents, a 56-percent drop.
RadioShack operates about 7,000 company stores and 700 kiosks. As it closes hundreds of stores, the company said it wants to expand the number of its kiosks and “aggressively relocate RadioShack stores to better real estate,” as it concentrates its efforts on improving its top-performing stores.
RadioShack, which stopped selling Verizon Wireless phones and services at the end of last year in favor or Cingular Wireless L.L.C. services, said that the full-year impact related to that transition was $19 million in inventory write-downs and labor, with most of the costs coming in the fourth quarter. RadioShack also sells wireless service from Sprint Nextel Corp.—having added the carrier’s iDEN services late last year—and prepaid services from a handful of companies.