RadioShack Corp. offered strong fourth-quarter and full-year results, but its 2005 outlook disappointed investors. The company’s stock was down almost 10 percent to $30.11 per share following the news.
RadioShack reported net income of $130.9 million, or 81 cents per diluted share, for the fourth quarter. The numbers were up from the $127.3 million or 77 cents per diluted share it reported in the same quarter a year ago.
“RadioShack had an outstanding 2004,” said Leonard Roberts, the retailer’s chairman and chief executive officer. “The company generated higher sales growth, expanded gross margin, leveraged SG&A (selling, general and administrative expenses), and increased operating income by 15 percent. Our investment in strategic growth channels, such as Sam’s Club and Sprint kiosks, impacting SG&A in the fourth quarter will serve as a platform for profitable growth going forward.”
However, RadioShack dropped its fiscal-year 2005 earnings per share estimate by 7 cents to between $2.34 to $2.40. The company’s first-quarter 2005 earnings per share guidance was 39 to 41 cents, even or down from the first quarter of last year. The numbers are below Wall Street expectations of 48 cents in earnings per share for the first quarter, according to analysts polled by Thomson First Call.
RadioShack executives said first-quarter sales were off to a sluggish start in part due to severe weather at many of its 7,000 retail locations, according to reports.
Wireless phone sales account for as much as 40 percent of RadioShack’s business, according to reports. Conversely, the retailer accounts for as much as one-fourth of all gross customer additions for its wireless partners Verizon Wireless, Sprint PCS and prepaid reseller TracFone Inc.
