NEW YORK—Slow mobile-phone sales continue to plague RadioShack Corp. as the company reported an 85-percent plunge in first-quarter profits.
The consumer electronics retailer said first-quarter income fell to $8.4 million, down dramatically from $55 million during the same period last year. Write-downs connected with the company’s turnaround plan related to fixed assets and inventory reduced the company’s pre-tax income by about $10 million.
The results follow a fourth quarter that saw a 62-percent drop and the sudden resignation of Chief Executive Officer David Edmondson, who admitted embellishing his resume. And RadioShack’s transition from Verizon Wireless to Cingular Wireless L.L.C. has been far rockier than expected, as the chain had trouble keeping Cingular products in stock and training staffers on the carrier’s offerings.
The company is closing hundreds of stores and reevaluating its inventory in an effort to jettison slow-moving products in favor of digital music players and other popular gadgets.
“While we knew first quarter would be weak, the results are worse than we anticipated,” acting CEO Claire Babrowski said. “We clearly have a lot more work to do to get this company back to levels of profitability which we all expect. The first-quarter results do nothing to change our belief in the turnaround plan announced early this year.”
Investors apparently had been expecting bad news, however, as shares of RadioShack dipped slightly in morning trading but rebounded almost entirely. By mid-day, shares of the stock were down only fractionally, dropping 10 cents to $17.94.
