It appears shares of RadioShack (NYSE:RSH) will have to first go down to eventually go up, as investors hoping for a quick recovery with new CEO Julian Day at the helm have quickly seen recent stock gains evaporate.

RadioShack reported an unexpected third-quarter loss before the market open yesterday, sending the shares down more than 7% to a recent $17.45. Total sales for the quarter fell 11% to $1.06 billion, while same-store sales fell a depressing 9.6%, though the company stated the figure should be only a fall of 6.8% prepaid wireless sale reclassifications and the closing of 530 stores hit sales by 5.7%. Even with the adjustments, the numbers were sad indeed.

To add insult to injury, the company reported a net loss of $0.11 per share after a gain of $0.75 in last year's quarter. There were a multitude of reasons cited, including lower wireless sales and wireless kiosk writedowns, a tax gain last year, a bad product mix, and higher operating expenses.

Admittedly, it's too soon for Mr. Day to put his stamp on the company after only four months at the helm, but conditions look to be worsening instead of improving or even stabilizing. The quarterly details reminded me of those being offered by other embattled retailers, including Sharper Image (NASDAQ:SHRP) and Pier 1 Imports (NYSE:PIR): namely, plummeting store comps and an inability to find a merchandise mix that consumers care to buy. Plus all have announced a CEO turnover.

One of the silver linings for the quarter was that operating cash flow came in positive, although free cash flow was negative as the company spends to reposition its stores and find the best use for capital expenditures. As a contrarian investor, I tend to gravitate toward situations where things look grim yet have the potential for upside once sales and earnings revert back to normal levels.

Unfortunately for RadioShack, I see it as a mature retailer with scarce opportunities to open new stores. I also can't find a competitive advantage or key product that would drive customers into the stores. For example, Best Buy (NYSE:BBY) and Circuit City (NYSE:CC) tend to have the latest electronics people want, like flat-panel televisions, while Wal-Mart (NYSE:WMT) is known for its low costs. It's hard to compete somewhere between them.

Competitive advantage isn't the only Foolish investment characteristic I screen for, but it is one of the more important ones. Scroll down the list and it will quickly become apparent that RadioShack isn't up to snuff on most metrics. At least Day has plenty of avenues to improve the company's fortunes going forward, but it won't be easy.

For related Foolishness:

Wal-Mart is an Inside Value pick while Best Buy is a Stock Advisor recommendation.

Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.