RadioShack Corp. (Fort Worth, Texas) reported a better-than-expected first-quarter profit as cost cuts helped offset weaker sales.
The consumer electronic retailer’s net income rose more than four times that of a year ago. Total sales, however, fell 14.5 percent and same-store sales dropped 9.2 percent, both said to be due to weaker wireless sales. Overall sales were also hurt by fewer company-operated stores and kiosks, down 506 from last year.
“We took the opportunity earlier this year to warn that same store sales numbers for the first quarter were likely to be challenging, given the highly promotional nature of our business in the first quarter last year,” said chairman and ceo Julian Day. “And so it proved. Nonetheless, against this background we were able to produce financial results which reflected steady improvement in our operating economics.”
“Results reinforce our view that [Day] can raise profitability to surprising levels, and that there is in fact a place in the U.S. consumer world for a convenience-based retailer of technology solutions,” an analyst at Goldman Sachs said in a note.
That retailer might not be Circuit City Stores Inc. (Richmond, Va.), which said it expects a first-quarter loss and withdrew its more optimistic forecast for the first half.
In a statement, the consumer electronics retailer cited “substantially below-plan” April sales, mainly tied to flat-panel and projection TVs.
The company expects a loss from continuing operations for the quarter.
Last month, Circuit City forecast a pretax loss of $40 – $50 million for the first half with a strong recovery in the second half. But yesterday, it withdrew that outlook, citing “uncertainties in the current operating environment.”