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RadioShack Q2 Profits Fall 53%

Fort Worth, Texas –
One-time charges, including

transition from T-Mobile to Verizon Wireless

in September, contributed to a
53 percent decline in RadioShack’s second-quarter earnings.

Net income was
$24.9 million for the three months, ended June 30, while sales slipped 2.1
percent to $941.9 million on weakness in its Sprint and T-Mobile postpaid
wireless sales. Comp-store sales for company-operated locations and Target
wireless centers fell 7.8 percent.

The one-time costs
included a $3 million pretax charge for phasing out T-Mobile inventory, and an
$8.7 million pretax cost for closing a company-owned manufacturing plant in

The sales decline
was led by a $76.1 million drop in sales at company-owned stores, which was
partially offset by a $55.7 million gain from the rollout of
RadioShack-operated wireless departments to nearly 1,400 Target stores over the
prior 12 months.

During the period
the chain turned over operation of all remaining Sam’s Club wireless kiosks
directly to the warehouse club.

Sprint postpaid
wireless sales were negatively affected by a nationwide change to the carrier’s
upgrade program, RadioShack said, while T-Mobile postpaid wireless sales were
negatively affected by “actions taken to minimize the risks of the company’s
uncertain relationship with T-Mobile.”

The company said
it anticipates increased Sprint sales in upcoming quarters as customers become
eligible for upgrades.

Lower sales of
digital-to-analog TV converter boxes and antennas, digital imaging products,
and digital music players also contributed to the comp-store sales decline,
which were partially offset by higher postpaid wireless sales from AT&T.

Broken out by category,
CE — comprised of TVs, digital cameras and camcorders, and digital music
players — fell 17 percent; mobile fell 7.1 percent; and “signature” —
comprised of headphones, tablet accessories, converter boxes,  related TV antennas,  and music and wireless accessories —
together fell 5.8 percent.

In a statement,
president/CEO Jim Gooch, said, “Our second-quarter results reflect a number of
short-term transitional changes related to our wireless carriers. We are
working diligently to position RadioShack for future growth in the wireless
space, and our new relationship with Verizon Wireless, the nation’s largest
wireless provider, is an integral piece of that program … We are aware of the
challenges that remain given the current consumer climate, and we believe we
are taking the right steps to move forward with new initiatives that build on
our strengths while addressing the changing needs of our customers.”