U.S. electronics retailer RadioShack Corp reported a much bigger-than-expected first-quarter loss as its turnaround efforts failed to bear fruit, raising doubts about the company’s long-term prospects.
Shares of RadioShack, which reported its ninth straight quarterly loss, fell as much as 14 per cent in early trading.
“... We increasingly believe time could be running out for the company,” BB&T Capital Markets analyst Anthony Chukumba wrote in a note.
The company’s sales have been falling since 2010 as it battles executive exits and tough competition from the likes of Best Buy Co Inc, Amazon.com Inc and Wal-Mart Stores Inc, who offer wider selection and lower prices.
The company has been trying to reposition itself and connect with the more tech-savvy younger shopper or mobile phone shopper by collaborating with popular celebrities and converting its stores to “concept stores”.
Concept stores allow shoppers to connect their media devices and experience products first-hand, before making a purchase.
RadioShack announced plans in March to close up to 1,100 underperforming stores. The company, however, said in May that its agreements with lenders allowed it to close fewer stores.
The company, which operated 4,250 stores in the United States as of May 3, said on Tuesday it planned to close up to 200 stores in the current financial year.
The closure raises the risk of “worse outcomes” for shareholders, Stifel Nicolaus analysts said in a client note.
RadioShack’s shareholders rejected its executive compensation plan for the second year in a row, a filing showed on Monday, indicating growing investor frustration with the company.
RadioShack said it ended the first quarter with total liquidity of $423.7-million, including $61.8-million in cash and cash equivalents.
“Our key issue is that we do not see a scenario near to mid term where the company can drive a gross profit in excess of SG&A (selling, general and administrative expenses),” Janney Capital Markets analysts wrote in a note.
Gross profit for the quarter was $268.7-million, below SG&A expenses of $335.9-million.
The company’s net loss widened to $98.3-million, or 97 cents per share, in the first quarter, from $28.0-million, or 28 cents per share, a year earlier.
RadioShack reported an adjusted loss of 98 cents per share.
Net sales fell 13 per cent to $736.7-million.
Analysts on average had expected a loss of 52 cents per share on sales of $767.5-million, according to Thomson Reuters I/B/E/S.
Sales in stores open for at least a year fell 14 per cent.
RadioShack’s shares were down 6.5 per cent at $1.44 on the New York Stock Exchange. The stock has lost more than half its value in the year to Monday’s close.
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