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RadioShack Posts Q2 Loss

7/21/2006 08:52:00 AM Eastern

Fort Worth, Texas — RadioShack posted a $3.2 million net loss on sales of $1.1 billion for its second quarter, down from the $52 million profit the chain made during the same period last year.

The $1.1 billion in sales during the quarter, ended June 30, were up 1 percent, compared with the same period in 2005.

RadioShack executives cited a variety of reasons for the shortfall including a challenging retail environment in the Northeast and problems surrounding its wireless business, costs related to a recently implemented turn around plan, store liquidation activities, and an $8.5 million loss from a preliminary settlement of certain wage and hour class action lawsuits.

“Consumer awareness of RadioShack as a destination for Cingular wireless products and services remains low,” the company said in a written release.

RadioShack will address the Cingular situation by changing its pricing, promotion, merchandising and how the chain sells wireless products, it said.

“Management believes it can improve the wireless business as we alter our approach,” said Claire Babrowski, president/COO. “The wireless business is very different from the traditional consumer electronics business. Our second-half marketing plan has been revamped in recognition of that and breaks from our past approach of treating wireless the same as all our other product categories."

RadioShack performed better in the MP3 category with player sales rising 20 percent; accessories for MP3 players and Bluetooth devices were up 9 percent.

Company executives said about 650 stores are now selling flat-panel TVs and the chain’s remaining stores will pick up these products by September. Each location will display between two and 10 SKUs with screen sizes no larger than 37 inches. Inventory will be kept on hand in many cases.