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RadioShack Revises Third Quarter Estimates Downward

Citing what it described as a dramatic deterioration in August revenue, RadioShack has lowered its sales and earnings estimates for the third quarter, echoing similar warnings by Best Buy, Tweeter and Ultimate Electronics.

“Sales softened abruptly in August and despite some promotional activities to stimulate business” — including sales incentives and radio spots — “we have been unable to overcome the falloff in consumer demand,” said chairman/CEO Len Roberts. The weakness spanned almost all product categories including wireless, the company reported.

In a conference call that followed the announcement, executives noted that comparable store sales were trending down 5 percent in August compared to comp gains of 4 percent in July, due to slower traffic and smaller average tickets.

Roberts said the specialty chain continues to have confidence in its business model and merchandising plans for the fourth quarter and beyond, but has nevertheless lowered its third quarter sales forecast from a gain of 2 percent to 3 percent to a decline of 3 percent to 4 percent. Consequently, the company also lowered its per share earnings estimate from 33 cents to between 23 cents and 26 cents.The news follows similar pre-announced shortfalls at Best Buy, Tweeter Home Entertainment Group and Ultimate Electronics (see story below). Best Buy slashed its fiscal second quarter earnings outlook by nearly half due to “significantly softened” comp-store sales in July, while Tweeter is projecting a 5 percent to 7 percent drop in fiscal fourth quarter comps as a result of slower traffic and the weak stock market.