RadioShack Q3 Income Jumps 22%, Hits $70 Million
By Jeff Malester -- TWICE, 10/25/2004
Fort Worth, Texas — Wireless, home networking and digital imaging sales helped push up third-quarter sales 4 percent at RadioShack, hitting $1.1 billion, compared with $1.06 billion in the year-ago period.
Comp-store sales climbed 5 percent in the three months, while wireless communications department sales jumped 19 percent.
RadioShack net income soared 22 percent in the third quarter, ended Sept. 30, reaching $69.7 million, compared with $57.1 million in the same three months a year earlier.
“Strong wireless and computer department sales, along with greater cost leverage vs. last year, positively impacted our bottom line,” said Leonard Roberts, chairman/CEO. RadioShack includes home networking and digital imaging within its computer category and, in a conference call, cited handset sales and higher residual income as major drivers within the wireless category.
Roberts claimed the retailer's decisions and execution throughout the organization were the keys to higher profit. For one, expenses as a percent of sales were leveraged by nearly 2 percentage points, and another, expenses decreased 1 percent in the third quarter year-on-year.
The company said it remains fully committed to building upon the operational efficiency improvements it has achieved over the past two years, and expects a “promising future” due both to current quality of earnings and the growth initiatives ready for deployment in 2005.
For the nine months, RadioShack sales increased nearly 3 percent to $3.25 billion from $3.16 billion. Net income rose 21 percent to $206.3 million in the period, compared with $171.2 million in the same nine months in 2003.
In the conference call, Roberts deflected past criticisms from the financial community over RadioShack's perceived over-reliance on wireless as a core growth driver. “It's a large, growing business we already know and are very good at,” he said, citing future opportunities in the pre-paid and data markets, and in developing technologies like Wi-Max. “Wireless is not a product cycle, it's a protocol.”
Looking ahead to the fourth quarter, the company is expecting store renovations, better in-stocks, its new Sam's Club kiosks, and recent product additions including Sirius Satellite Radio, Monster Cable and Hewlett-Packard's Apple iPod to help drive sales. — Additional reporting by Alan Wolf
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