RadioShack financials improve, but investors remain cagey

RadioShack Corp. appears to have pulled out of its tailspin, reporting a five-fold increase in net income in the first quarter.
The retail chain said it netted $42.5 million in the recent quarter, up dramatically from a net income of $8.4 million in the year-ago period. RadioShack executives credited lowered general and administrative expenses as well as improvements in gross margins.
The company continued to suffer slowing sales, however. First quarter comparable store sales were down more than 9% from 2006, and total sales were $992 million, down 14.5% from the previous year.
Shares of RadioShack inched downward on the news, losing 30 cents, or 1%, to $28.77.
“While we recognize and are focused on our top-line sales challenges, particularly in the wireless business, we will continue to bring a disciplined approach to the management of our business, with the goals of improving profitability, strengthening our balance sheet and driving cash flow,” said CFO Jim Gooch.
RadioShack currently sells AT&T Mobility, Sprint Nextel Corp. and a handful of prepaid wireless services, having dropped service from Verizon Wireless at the end of 2005. The retail outlet once accounted for one-fourth of wireless gross customer additions, but has since seen its market share impacted by big-box retailers, online channels and carriers increasing their emphasis on company-owned stores.