RadioShack Corporation Announces Net Income of $0.34 Per Share for the Third Quarter of 2007, Compared with a Net Loss of $0.12 for Third Quarter of 2

By: RadioShack | 2 Shares 52 Reads

October 29, 2007 // Franchising.com // Fort Worth, Texas, – RadioShack Corporation (NYSE: RSH) today announced net income of $46.3 million (or $0.34 per diluted share) for the third quarter of 2007. In the third quarter of 2006 the company reported a net loss of $16.3 million or $0.12 per diluted share.

Third quarter 2007 comparable store sales declined by 8.6%, while total sales declined 9.4%. The main drivers of the sales decline were the continuing negative sales trend in the Sprint post-paid wireless and related wireless accessory businesses partially offset by strong performance in both prepaid wireless phones and global positioning systems. Despite these sales declines, the company reported an increase in gross profit dollars and a reduction in both SG&A rate and dollars. The company also reported a significant increase in cash balances.

"We are pleased to announce the continuation of improved financial results in the third quarter," said Julian C. Day, Chairman and Chief Executive Officer. "We continue to face challenges at the top line in our business, mainly as a result of well publicized developments in post-paid wireless related to Sprint. We are addressing those challenges energetically and hope that having configured the business for increased profitability, we will now prove successful in configuring it for growth."

During the quarter ended September 30, 2007 the company repurchased $162 million of its shares which essentially completed the existing authorized share repurchase program. These repurchases, coupled with the repurchases during the first half of 2007, brought the total repurchases for the year to $209 million or 8.7 million shares.

Cash balances increased to $417 million at the end of the third quarter of 2007, an increase of $141 million over third quarter of 2006. The 2007 improved cash balance was reduced by the pay down of $150 million of 10 year bonds during the third quarter and the $209 million of share repurchases noted above. The $500 million (net of these items) of cash generation during the past year was mainly driven by the growth in net income and the continued improvements in inventory management. RadioShack's net inventory position (inventory minus accounts payable) improved $190 million from this time last year.

The gross margin rate for the third quarter increased 490 basis points over last year, from 46.1% to 51.0%. This increase was a result of improved inventory management and a more profitable product mix.

SG&A expenses declined by $57.4 million or 13% for the third quarter of 2007. This decrease reflects a continuing effort to improve our return on expense dollars, most notably in payroll and professional fees.

"As a result of adverse developments in the economy, we anticipate that the trading environment in the fourth quarter will be challenging in terms of both absolute demand as well as the competitive landscape. Despite this, we currently expect to produce an improvement in net income this fourth quarter when compared to the fourth quarter of 2006," said Jim Gooch, Chief Financial Officer.

RadioShack Corporation filed today with the SEC its Form 10-Q for the quarter ended September 30, 2007.

Forward-Looking Statements
This press release contains or may contain forward-looking statements, as referenced in the Private Securities Litigation Reform Act of 1995 ("the Act"). These forward-looking statements reflect management's current views and projections regarding economic conditions, retail industry environments and company performance. Factors that could significantly change results include, but are not limited to, sales performance, economic conditions, product demand, expense levels, competitive activity, interest rates, changes in the company's financial condition, availability of products, the regulatory environment and factors affecting the retail category in general. Additional information regarding these and other factors is described in the company's filings with the SEC, including its most recent annual report on Form 10-K and quarterly report on Form 10-Q.

About RadioShack Corporation
RadioShack Corporation (NYSE: RSH) is one of the nation's most experienced and trusted consumer electronics specialty retailers. Operating from convenient and comfortable neighborhood and mall locations, RadioShack stores deliver personalized product and service solutions within a few short minutes of where most Americans either live or work. The company has a presence through almost 6,000 company-operated stores and dealer outlets in the United States, over 150 RadioShack locations in Mexico and nearly 800 wireless phone kiosks. RadioShack's dedicated force of knowledgeable and helpful sales associates has been consistently recognized by several independent groups as providing the best customer service in the consumer electronics and wireless industries. For more information on RadioShack Corporation, or to purchase items online, visit www.radioshack.com.