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RadioShack Q1 Sales Down 9%, Yet Net Rises 11%

4/23/2002 10:42:00 AM Eastern

Fort Worth, Texas - Improved profit margin offset declining sales at RadioShack during the first quarter, helping the retailer to increase its earnings.

RadioShack reported sales of $1 billion for the first three months, down 9 percent from the $1.1 billion recorded in the year-ago period. Comp-store sales in the first quarter decreased 7 percent.

The retailer announced net income of $57.6 million, up 11 percent from the $46.5 million reported in the first quarter of 2001. On an adjusted basis, the company reported $65.1 million in net income for the first quarter of 2001.

"Trends in gross margin percentage and expenses are running very favorably," said Leonard Roberts, chairman/CEO, about RadioShack's 228-basis-point increase in gross margin, to 50.2 percent, during the first three months ended March 31. Selling, general and administrative (SG&A) expenses were down 3 percent.

"With an improved merchandising strategy now taking hold, we expect gross margin dollar improvement to follow suit," said Roberts, who added, "RadioShack is still clearly on a path to deliver 13 percent to 15 percent earnings-per-share growth in 2002, despite lower first-quarter sales."

In the full year, total sales are likely to grow from a negative 9 percent in the first quarter to about flat in the second quarter. This will rise to a positive 4 percent to 5 percent in the second half.

For the second quarter in 2002, the company expects earnings per share to increase 12 percent to 16 percent.

Gross margin percentage for the full year will likely increase about 100 basis points, compared with 2001, said the retailer. SG&A expense for all of 2002 is expected to grow about 1 percent to 2 percent.

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