RadioShack's third-quarter loss widened, sales dropped for the eleventh consecutive quarter and the electronics retailer said it has begun to roll out new cost cuts that will allow it to stay afloat.
CEO Joseph Magnacca said Thursday that the company will reduce expenses at its headquarters and continue with its plans to close stores. The maneuvers should boost earnings by more than $400 million annually, he said.
The ubiquitous seller of batteries and obscure electronic parts has run into trouble as online competition has grown fiercer. The company's explosive growth exacerbated those problems and it has become a central issue it its fight with lenders as it tries to close hundreds of locations.
The company said in March that it planned to close up to 1,100 U.S. stores, trimming the total to just over 4,000. It backed away from that aggressive plan two months later under pressure from lenders and vowed to find other ways to cut costs, including more limited store closings.
That fight is ongoing.
Last week, Salus Capital Partners claimed that the Fort Worth, Texas, company had breached covenants on a $250 million term loan and asked the company to prepay some of its debt, along with other fees. RadioShack disputed the claim, calling it "wrong and self-serving."
Meanwhile, the RadioShack continues to hemorrhage.
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For the period ended Nov. 1, the company lost $161.1 million, or $1.58 per share, which was much worse than the per-share loss of $1.04 that analysts had expected, according to FactSet. It's also a bigger loss than last year's $135.9 million, or $1.35 per share, during the same period.
Revenue declined to $650.2 million, hurt by challenges in its postpaid mobility business. The performance missed Wall Street's estimate of $717 million.
Sales at stores open at least a year, a key indicator of a retailer's health, tumbled 13.4 percent on declining traffic and softness in its mobility business. This figure excludes results from stores recently opened or closed.
Magnacca said that over the three-day Thanksgiving holiday, sales at U.S. corporate stores open at least a year climbed 35 percent for the retail segment, but mobility dropped 27 percent.
"Our core retail efforts are working, even as our mobility category is still experiencing challenges," Magnacca said.
Shares of RadioShack Corp. are down almost 80 percent this year.
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