Thursday, September 11, 2014

Radio Shack Quarterly Results $RSH

From the press release:

13 WEEKS ENDED AUGUST 2, 2014, SUMMARY
Total net sales and operating revenues were $673.8 million, compared to $861.4 million last year. Comparable store sales were down 20.0% driven by traffic declines and soft performance in the mobility business.
Consolidated gross profit was $237.6 million, or 35.3% of net sales, compared with $301.5 million last year, or 35.0% of net sales. The decline in gross profit dollars was primarily driven by a 30.4% decrease in sales in the mobility platform. Excluding inventory reserves related to store closures, our consolidated gross profit was $235.6 million, or 35.0% of net sales.
Consolidated selling, general and administrative (SG&A) expenses were $323.6 million, or 48.0% of net sales, compared with $334.4 million last year, or 38.8% of net sales. This represents a 9.2 percentage point increase as a percentage of net sales and operating revenues for the 13 weeks ended August 2, 2014, which was driven by declining sales volumes period over period. Excluding the impact of severance costs related to potential store closures, consolidation of certain facilities in China and a non-cash charge related to the elimination of a key executive life insurance program, our SG&A was $306.3 million dollars, or 45.5% of net sales. These adjusted SG&A dollar decreases were primarily related to compensation and advertising as a result of our cost reduction efforts.
Operating loss for the second quarter was $119.4 million compared to operating loss of $51.1 million last year. On an adjusted basis, operating loss was $83.5 million excluding certain non-cash items and $8.6 million in severance and $20.6 million in impairments of fixed assets and goodwill, partially offset by $2.0 million in reserves in inventory.
Loss from continuing operations was $137.4 million, or $1.35 per diluted share, compared to a loss from continuing operations of $51.4 million last year. On an adjusted basis, loss from continuing operations was $101.5 million, which compares to an adjusted loss from continuing operations of $62.9 million last year.

26 WEEKS ENDED AUGUST 2, 2014, SUMMARY
Total net sales and operating revenues were $1,410.5 million, compared to $1,709.8 million last year. Comparable store sales were down 16.9% driven by traffic declines and soft performance in the mobility business.
Consolidated gross profit was $506.3 million, or 35.9% of net sales, compared with $642.4 million last year, or 37.6% of net sales. The decline in gross profit dollars was primarily driven by a 24.7% decrease in sales in the mobility platform. Excluding inventory reserves related to store closures, our consolidated gross profit was $500.2 million, or 35.5% of net sales.
Consolidated selling, general and administrative (SG&A) expenses were $659.5 million, or 46.8% of net sales, compared with $668.1 million last year, or 39.1% of net sales. This represents a 7.7 percentage point increase as a percentage of net sales and operating revenues for the 26 weeks ended August 2, 2014, which was driven by declining sales volumes period over period. SG&A expenses for the six months ended July 31, 2013, included a gain on the sale of a building of $2.4 million. Excluding the impact of severance costs, consolidation of certain facilities in China and a non-cash charge related to the elimination of a key executive life insurance program, our SG&A was $642.2 million dollars, or 45.5% of net sales. These adjusted SG&A dollar decreases were primarily related to compensation and advertising as a result of our cost reduction efforts.
Operating loss through the second quarter was $200.4 million compared to operating loss of $61.4 million last year. On an adjusted basis, operating loss was $165.5 million excluding certain non-cash items and $8.6 million in severance and $21.4 million in impairments of fixed assets and goodwill, partially offset by $6.1 million in inventory reserves.
Loss from continuing operations was $235.7 million, or $2.31 per diluted share, compared to a loss from continuing operations of $74.7 million last year. On an adjusted basis, loss from continuing operations was $200.8 million, which compares to an adjusted loss from continuing operations of $89.4 million last year.

LIQUIDITY
The Company ended the quarter with total liquidity of $182.5 million at August 2, 2014, including $30.5 million in cash and cash equivalents and $152.0 million of availability under the 2018 Credit Agreement. This availability is net of letters of credit totaling $89.4 million and $43.0 million in borrowings outstanding at August 2, 2014. The Company's total debt was $658.0 million at August 2, 2014, which matures between 2018 and 2019.
This is just a huge burn rate. And these operating income numbers don't reflect the $16.9 million in quarterly interest expense, which is almost $70 million annualized.

The comp store sales decline was worse this quarter than the first half of the year, meaning that the trend got worse. Apparently that was because cell phone sales deteriorated even more during this quarter, going from a 25% yoy decrease to a 30% yoy decrease.

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