RadioShack Corp. (NYSE: RSH) Stock prices prediction, RadioShack Shares prices outlook : RadioShack Corp.’s second-quarter earnings slid 53% on a drop in sales at its U.S. consumer electronics stores. It also disclosed a pact with Verizon Wireless to offer its products and services beginning in September. Under the new Verizon deal, RadioShack will offer prepaid and postpaid wireless products and services in more than 4,300 RadioShack company-operated stores beginning Sept. 15. It will stop carrying T-Mobile products the day before.
Shares climbed 15.7% to $15.15 premarket even as the company's top- and bottom-line results missed estimates.
RadioShack has had an uneasy partnership with T-Mobile, the nation's fourth-largest mobile carrier. The company said in April that T-Mobile had breached a contract, but it was hopeful for a resolution. Tuesday, RadioShack said postpaid wireless sales in the quarter were hurt by "actions taken to minimize the risks of the company's uncertain relationship with T-Mobile."
RadioShack has transformed itself from an all-purpose electronics retailer to a more focused seller of mobile devices, but the strategy is under pressure from the increasing competition of online and discount stores. Despite posting weak numbers for the past few periods, the company said Tuesday it is hopeful trends will improve in the back half and it is comfortable with analysts' estimates for the remainder of the year.
To help secure its position in the mobile-phone arena, RadioShack has been ramping up its presence in Target Stores Inc. (TGT) outlets. It ended the quarter with Target Mobile kiosks in 1,481 locations at the end of the second quarter, compared with 887 in the prior quarter.
For the latest period, RadioShack reported earnings of $24.9 million, or 24 cents a share, down from $53 million, or 41 cents a share, a year earlier. Excluding charges for clearing out T-Mobile inventory and closing a manufacturing plant in China, earnings were 31 cents a share.
Sales fell 2.1% to $941.9 million, as same-store sales dropped 7.2% at company-operated stores and Target Mobile kiosks.
Analysts surveyed by Thomson Reuters expected earnings of 37 cents on revenue of $1.03 billion.
Sales for the mobility segment fell 7.1%. RadioShack said Sprint sales were affected by a change to the carrier's upgrade program, which delayed upgrade eligibility for some customers. The impact isn't expected to be more than a brief hiccup; in the current quarter, the company said, Sprint postpaid wireless sales are trending "strongly positive" on a sequential basis.
Sales in the signature segment, which includes accessories and television converter boxes, slid 5.8%, while consumer-electronics sales fell 17% on poor digital TV and camera sales.
Gross margin fell to 45.9% from 47.5%, with expenses from the T-Mobile inventory change and China plant closing contributing to the fall.
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