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Investors Punish RadioShack Amid Declining Sales and Store Closure Plans

By Tamara Walsh – Mar 4, 2014 at 12:12PM

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Investors dumped shares of RadioShack after the retailer reported dismal results for its fourth quarter and said it would close more than 1,000 stores.

RadioShack (RSHCQ) reported a wider-than-expected loss for its fourth-quarter today, and the retailer said it would close as many as1,100 underperforming stores in the United States. Investors dumped shares of the struggling electronics retailer on the news, sending the stock lower by more than 13% to trade around $2.34 a share as of 11:15 a.m..

For the quarter ended Dec. 31, RadioShack lost $1.90 per diluted share. or $191.4 million, compared to a loss of $63.3 million during the same period a year ago. Wall Street was looking for a net loss of $0.14 per share.

RadioShack reported revenue of $935.4 million for the period, which was down from $1.17 billion a year ago. Analysts were expecting revenue of $1.12 billion.

"Our fourth quarter financial results were driven by a holiday season characterized by lower store traffic, intense promotional activity particularly in consumer electronics, a very soft mobility marketplace and a few operational issues," RadioShack CEO Joseph Magnacca said in a press release. Sales at stores open at least a year -- a key indicator of a retailer's health -- sank 19%.

As a result of these challenges, RadioShack said it would shutter up to 1,100 U.S. stores. This wold leave the retail chain with 4,000 stores, including more than 900 franchised locations. The company didn't immediately identify which stores will be closed or how many jobs would be affected. The company said that the stores targeted for closures are being selected based on location, area demographics, lease duration, and financial performance.

Despite the stock's sharp decline today, shares of RadioShack are up more than 4% year to date.

-- Material from The Associated Press was used in this report.


Tamara Rutter has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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