Consumer electronics chain RadioShack Corp., a strip-mall staple for decades, had another difficult quarter as income tumbled 79% amid competition from Best Buy Co. and slipping demand for consumer electronics.
Net sales for the quarter, which ended Dec. 31, were up 5.9% year over year to $1.39 billion, helped by AT&T Wireless and Verizon Wireless products and services. But RadioShack has also focused heavily on tablets and smartphones such as Apple’s iPhone, which sell well but are low-margin items.
The Fort Worth, Texas-based company also said that consumers are less interested in global positioning systems, digital cameras and MP3 music players -- sales in the consumer electronics category slid nearly 30% over the quarter. Changes at Sprint also negatively impacted RadioShack’s business.
Combined with heavy discounts from the holiday season, the chain’s profit slipped to $11.9 million, or 12 cents a share, from $57 million, or 51 cents a share, in the fourth quarter of 2010.
For the year, net sales were up 2.6% to nearly $4.4 billion. But income slumped nearly 65% to $98.4 million, or 95 cents a share, from $206.1 million, or $1.68 a share, in 2010.
The company said in a conference call with analysts that it expects its net income to fall again in 2012 and will scale back its marketing budget.
Last year, it opened 32 new stores but closed 42 older ones in the U.S., sparking concerns that it could be inching toward the fate of Circuit City Stores Inc., which filed for bankruptcy and then liquidated all its stores by mid-2009.
RadioShack said it would evaluate its private label products, with Chief Executive James F. Gooch admitting that "we’ve let our strategy become somewhat stale."
The company's stock dropped 7.5% to $7.29 in midday trading in New York, down more than 56% from its 52-week high of $16.70.
"We are anticipating the first-quarter results to be even more difficult than the fourth quarter of 2011," Gooch said during the call. "However … we expect to make steady progress throughout the remainder of the year."
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