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R’Shack Q1 Profits Up 16%

Fort Worth, Texas
– RadioShack said its focus on mobility, connectivity and brand re-building
helped fuel a 16.2 percent increase in net income for the three months ended
March 31.

Sales for the
period rose 4 percent to $1 billion, and comp-store sales including kiosks
increased 4.7 percent.

The sales gains
included a 4.3 percent increase, or $37.2 million, at company-owned U.S.
stores, which was partially offset by an 8.2 percent decrease, or $5.1 million,
in kiosk sales, due to fewer locations and the closure of its Sprint-branded
kiosks in August.

The downturn in
kiosk sales was partially offset by comp-store revenue gains in Sam’s Club
kiosk locations, RadioShack said.

The balance of the
sales gains, or about $7.5 million, was primarily due to sales growth in
company-operated stores in Mexico and higher sales to independent dealers.

In a statement,
chairman/CEO Julian Day said, “Our performance this quarter highlights the
success of our strategy to increase our focus on mobility, connectivity, and
innovative products and services, while continuing our progress in brand
building and delivering a consistent, high-quality, customer experience.”

Broken out by
category, wireless revenue was up nearly 49 percent, driven by increased Sprint
Nextel postpaid wireless sales, the addition of T-Mobile as a postpaid wireless
carrier, and increased sales of prepaid wireless handsets.

The second-largest
increase came from services, which was up 24.8 percent and driven largely by sales
of prepaid wireless airtime.

The company’s
remaining merchandising categories all experienced declines during the quarter
led by accessories, which fell 26 percent on declining sales of digital converter
boxes, and “modern home,” which fell 14.3 percent on decreased sales of TVs and
DVD players.

Inventories were
up $18.1 million to $688.7 million at the end of the quarter, compared with the
prior three-month period, and were up $112.9 million compared with the year-ago
quarter, due to greater investments in wireless products to support strong category

selling, general and administrative (SG&A) expenses were $380.7 million, or
36.5 percent of sales, compared with $365.8 million, or 36.5 percent of sales,
for the year-ago quarter. The increase resulted primarily from investments in
employee incentive compensation and advertising, the company said.

More recently, the
retailer was rumored to be an acquisition target, completed its nationwide rollout
of iPhone, and said a decision will be made this year whether to expand or shut
its 100-store test of mobile departments within Target stores.