RadioShack Takes Q1 Hit

"I'm certainly not very pleased with our first-quarter sales performance," David Edmondson, president and CEO of the Fort Worth-based RadioShack, told analysts and stockholders in the earnings call, "but we're focused on improving the fundamentals of our business."

The short version of the financial picture is net income clocked in at $55 million or $13 million less than the first-quarter close in 2004. Comparable store sales fell 1%, with Edmondson faulting wireless sales in core stores for the setback. But, overall Q1 sales rose 3% in the year-to-year comparison, ringing up slightly more than $1.1 billion.

Edmondson says the going-forward plan is to drive the wireless business "pretty hard" as execs continue contract talks with wireless partners. He says the distribution channels and how the carriers manage them are key to RadioShack's juxtaposition for the future.

Before April ends, RadioShack will be announcing a new advertising agency for its $250-million account after a whirlwind search that began in Q1. By the fourth quarter, the expectation is a campaign will be ready to go to explain to customers why they need RadioShack products, why they want to buy at one of the company's 7,100 stores and 579 kiosks and why they need to buy now, Edmondson said.

Beyond a new ad agency, RadioShack will roll out math and sciences educational programs for students within two weeks. The platform launch, Edmondson says, targets a market "that we think is very undeveloped." And though he didn't go into detail, he promised that a revamped dot-com channel will debut in the next quarter.

"We believe we have a sound plan for the future," Edmondson says, "although we are disappointed we won't make as much money in 2005 as we did in 2004." The retailer's strong suits are gaming, computer parts and accessories and even wireless when some kinks get ironed out of the plan.

The corporate plan includes rapid-fire expansion of kiosks and Canadian stores now that the northern neighbor's courts have sided with RadioShack in a dispute with InterTan Inc., a Barrie, Ontario-based company that was spun off in 1987 and is now a wholly owned subsidiary of Circuit City. RadioShack terminated agreements for use of its name and purchasing its private-label products. The Canadian courts gave InterTan until June 30 to strip the RadioShack name from its signs and product lineup. "Our intent is to move aggressively into Canada," Edmondson said.