* EPS $0.50 vs estimate $0.73
* Sales fall 7.7 pct
* Sees ‘09 capex at $75 mln-$100 mln vs $85.6 mln in ‘08
* Says lower kiosk sales hurt comp sales and net sales
* Shares fall 20 pct (Adds analyst comment, CEO comment, updates stock activity)
By Franklin Paul
NEW YORK, Feb 24 (Reuters) - RadioShack RSH.N posted weaker-than-expected fourth-quarter earnings, as recession-weary consumers curbed spending on electronics, sending its shares down more than 20 percent.
The retail chain attributed its profit decline to weak sales of gadgets such as satellite navigation systems and smaller profits from mobile phone sales.
Analysts said that the digital television conversion, a boon to RadioShack thanks to sales of converter boxes and flat screen TVs, may no longer be enough to overcome the economic downturn, and portends poorly for the Fort Worth, Texas, company.
“While the company basically dodged (economic troubles) for much of 2008, the much weaker fourth-quarter results point to a more challenging 2009, with key product drivers now slowing, consumer spending weakening further, with more difficult comparisons, and potentially weaker margins,” said Credit Suisse analyst Gary Balter, in a client note.
Net income fell 39 percent to $62.0 million, or 50 cents a share, from $101.0 million, or 77 cents a share last year. Analysts on average had expected a profit of 73 cents a share before special items, according to Reuters Estimates.
Sales fell 7.7 percent to $1.3 billion. RadioShack said kiosk sales fell 2.2 percent. Comparable same-store sales for company-operated stores and kiosks fell 9.2 percent during the quarter.
“Our financial results for the fourth quarter obviously reflect the recessionary retail trading environment we face,” said RadioShack Chief Executive Julian Day in a statement.
In recent years, RadioShack has shut unprofitable stores and cut staff but it remains challenged by rivals such as Best Buy Co (BBY.N) and Wal-Mart Stores (WMT.N).
RadioShack said slack sales of GPS devices, memory players, and imaging products — which typically include cameras and printers — were offset somewhat by strength in digital television converter boxes, mobile phone contracts, flat-panel televisions and laptop computers.
Its profit margin was hurt as it cut prices to help sell slow-moving seasonal inventory. Profits were also pinched in its postpaid mobile phone business as more customers chose to upgrade, rather than sign on for new activations which are more profitable.
On a conference call with analysts, Day seemed to suggest, somewhat indirectly, that business in the first quarter had improved from the holiday doldrums.
“We are absolutely not in the business of providing earnings estimates or business forecasts. But ... the negative sales trends we experienced in parts of the fourth quarter did not carry over into the first quarter of 2009,” he said, but offered no further explanation.
Despite the demise of gadget retailer Circuit City, RadioShack, which runs 4,400 company-operated stores, and operates 2,300 other locations, still faces stiff competition from market leader Best Buy, which has expanded its mobile-phone departments and added standalone shops, as well as discounter Wal-Mart, which has stepped up its offerings.
RadioShack expects capital expenditure for 2009 to be $75 million to $100 million. It had spent $85.6 million in 2008.
Shares of RadioShack slipped $2.26 to $8.56 on Tuesday afternoon on the New York Stock Exchange. (Reporting by Franklin Paul and Mihir Dalal in Bangalore; Editing by Gopakumar Warrier, Derek Caney and Matthew Lewis)