RadioShack 1Q Blasts Analysts Views On Sales, Margin Gains

   DOW JONES NEWSWIRES 
 

RadioShack Corp. (RSH) reported an 11% increase in first-quarter net income on higher sales as the consumer-electronics retailer smashed analysts' expectations.

The company cited strength in its wireless business and of selling digital converter boxes which will be needed no later than June to watch over-the-air television.

"We are very pleased with the results," said Chairman and Chief Executive Julian Day.

The results follow a weak fourth quarter, when net income dropped a bigger-than-expected 39% on falling margins, consumers shifting away from higher-margin cellphone activations and weak sales of some product categories.

RadioShack has been seeking a way to be relevant as companies such as Best Buy Co. (BBY) and Wal-Mart Stores Inc. (WMT) take increasing market share on the consumer-electronics space. The company is renovating most company-owned stores and taking steps such having an electronics trade-in program in those locations.

RadioShack posted first-quarter net income of $43.1 million, or 34 cents a share, compared with $38.8 million, or 30 cents a share, a year earlier.

Revenue increased 5.6% to $1 billion.

The mean estimates of analysts surveyed by Thomson Reuters were earnings of 22 cents and revenue of $937 million.

Same-store sales climbed 5% - the increase would have been 6.2% absent an extra day a year earlier - and online sales jumped 28%.

Gross margin fell to 46.7% from 47.4%. But operating margins rose to 8% from 6.8% - the highest figure in four year - as overhead costs held steady despite the sales gains.

Cash levels were more than double year-earlier levels as of March 31 while inventories dropped 13%.

Shares closed Wednesday at $10.80 and were inactive premarket. The stock is down 46% since September but has jumped two-thirds since hitting a 16-year low last month.

-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136; [e-mail]