Dismal results highlight RadioShack woes heading into holidays
(Reuters) - Higher costs and weaker sales made RadioShack Corp (RSH.N) post a much deeper loss than analysts were expecting in the third quarter, increasing pressure on the struggling U.S. electronics retailer as it heads into the holiday season.
Tuesday's news pushed its shares down 15.6 percent to $2.97 - making it the New York Stock Exchanges' No. 2 loser - and overshadowed the fact that the company has received commitments for $835 million in new debt financing.
The results do not provide much reason for optimism, but the new debt financing commitment gives the company enough liquidity to make it through the holidays and fund turnaround efforts led by Chief Executive Joe Magnacca, BB&T Capital Markets analyst Anthony Chukumba said.
RadioShack's sales have been in free-fall amid executive departures, strong competition and an image problem. Despite its ubiquitous presence in the United States, analysts say it has not done enough to transform itself into a destination for mobile phone shoppers, nor has it become hip enough to woo younger shoppers.
Magnacca, who took the company's helm in February, reiterated on Tuesday that he expected the turnaround to take several quarters.
Under Magnacca, the company has changed its logo, reduced clutter in stores and improved displays of key brands. It is also removing some duplicated products from stores and moving them online, and stepping up its focus on carrying private-label goods that often have higher margins.
Also on Tuesday, the retailer named Paul Rutenis as its chief merchandising officer and Janet Fox as its senior vice president of global sourcing. Rutenis was most recently senior vice president and general merchandising manager for the home division at J. C. Penney Co Inc (JCP.N). Fox was most recently a senior vice president at Under Armour Inc (UA.N) and previously worked at J.C. Penney.
RadioShack lost $112.4 million, or $1.11 per share, in the third quarter, compared with a loss of $47.1 million, or 47 cents per share, a year earlier.
Sales fell to $805.4 million from $898 million.
Analysts had expected the electronics chain to lose 35 cents per share on sales of $891.7 million, according to Thomson Reuters I/B/E/S.
RadioShack said it obtained $835 million in financing commitments from a consortium of lenders led by GE Capital, Corporate Finance; CIT Corporate Finance; RBS Citizens, NA; and Salus Capital Partners. Some details about the financing were reported late on Monday by the Wall Street Journal and Reuters.
It also said that it continues to have a strong balance sheet and had total liquidity of $613 million as of September 30.
(Reporting by Jessica Wohl in Chicago and Dhanya Skariachan in New York; Editing by Gerald E. McCormick and Maureen Bavdek)