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RadioShack Reports Slow Wireless, Battery Sales

3/18/2005 01:01:00 PM Eastern

Fort Worth, Texas — RadioShack is reporting a slowdown in its core wireless and battery businesses this quarter.

“Business trends have under-performed our expectations,” said president and CEO-elect David Edmondson. "This has been driven by a recent deceleration in wireless sales in our core stores and, to a smaller extent, underperformance in our battery business."

In a conference call, Edmondson said the company’s wireless woes were related to the popularity of family plans, which offer free or discounted mobile phones and reduced rates for additional subscribers. Unlike carriers, which enthusiastically promote the programs in their direct-sell efforts, RadioShack’s store managers are reluctant to push the plans because they eat into their overall gross margins, he said.

Edmondson noted that family plans now represent roughly half of all new wireless contracts. “This is a trend that’s here to stay, and we have got to get execution around it,” he said.

He added that the battery drain was attributable to markdowns on specially packaged holiday gift sets, which have cut into sales of regularly priced batteries.

As a result of the downturn, RadioShack has lowered its first-quarter and full-year earnings forecasts for the second time in a month. The company will report its fourth quarter results on April 19.

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