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RadioShack’s Q4 Sales, Earnings Falter

UPDATE! Fort Worth, Texas — Weak fourth-quarter sales pushed RadioShack’s earnings lower for the three months ending Dec. 31.

Net sales declined 7.7 percent to $1.3 billion for the period, while net income fell 38.6 percent year over year to $62 million.

Same-store sales slipped 9.2 percent on weakness in the GPS, MP3 player, media storage, digital imaging and toy merchandise categories, but were partially offset by the strong performance of digital converter boxes, postpaid wireless, flat-panel TVs and laptop computers, the company said.

Net sales at company-owned stores fell 10.2 percent, sales at franchised stores fell 4 percent and kiosk sales slipped 2.2 percent, but the declines were offset by a 54-percent increase in online sales and gains from RadioShack’s recently acquired 200-store Mexican operation.

“Our financial results for the fourth quarter obviously reflect the recessionary retail trading environment we face,” said chairman/CEO Julian Day, although cost controls, minimal markdowns and improved inventory management helped limit the earnings decline. He added that RadioShack’s strong balance sheet positions the company “to take advantage of any opportunities the recessionary environment may offer in 2009.”

In a conference call, chief financial officer Jim Gooch described the fourth quarter as “an extremely tough and challenging retail environment.” He said the chain enjoyed a “pretty solid” Black Friday and finished December  “strong.”

Day concurred. “The first part of December was scary,” the CEO recalled. “The cavalry came in the later part of the month,” but it was insufficient to push comp sales into positive territory, he said.

Nevertheless, RadioShack doubled its flat panel TV sales, sold 3 million digital converter boxes, and enjoyed double-digit increases in laptop volume during the three-month period, Gooch said.

The chain also saw a resurgence in its Sprint and AT&T post-paid wireless businesses, which store operations executive VP Bryan Bevan attributed in part to fresh merchandise and new display tables that accommodate a broader assortment of handsets and more live models.

RadioShack will continue to operate Sam’s Club wireless kiosks under a new contract that runs through 2011, Gooch added, although its contract to operate Sprint kiosks will soon expire.

The 2.2 percent decrease in kiosk sales was primarily due to weak sales at fewer Sprint kiosks, but was partially offset by an increase in sales generated by the Sam’s Club kiosks, the company said.