4 Hidden Signs of Hope After RadioShack’s Earnings

Shares of RadioShack (NASDAQOTH: RSHCQ  ) declined around 17% on Tuesday after the company reported some unexpected results for the quarter. The Shack's sames-store sales were down 8%, revenue dropped 10%, and gross margins plummeted 21%. While these statistics are worrisome, it's important to look past the red ink to see what was driving these abysmal results and whether there are any clues to the company's turnaround efforts. 

Judging from RadioShack's conference call, it appears management went all in on an aggressive re-merchandising effort and pushed Wall Street's needs to the wayside. Re-merchandising typically involves refreshing inventory with a new mix of products, and liquidating old inventory. That's the primary reason RadioShack's results were so bad.

Beyond this development, there were four other signs of hope at the company in the conference call and earnings release:

  1. Remodeled stores are seeing double-digit same-store-sales increases.
  2. A new finance package should provide enough liquidity for turnaround efforts at least through 2016.
  3. Customer surveys show an improved shopping experience.
  4. Two new hires strengthen an already strong management team.

The steps RadioShack is taking today don't appear to be winning over Wall Street just yet, but time will tell if CEO Joe Magnacca and his team of retail all-stars will be able to right this sinking ship. In the following video, Motley Fool analyst Blake Bos goes over the companies earnings, elaborates on the four signs of hope, and tells investors what he's watching for at RadioShack going forward. 

3 Undervalued stocks in today's expensive stock market
With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2695837, ~/Articles/ArticleHandler.aspx, 9/28/2016 10:00:46 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 12 minutes ago Sponsored by:
DOW 18,339.24 110.94 0.61%
S&P 500 2,171.37 11.44 0.53%
NASD 5,318.55 12.84 0.24%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
RSHCQ $0.00 Down +0.00 +0.00%
RadioShack CAPS Rating: *