RadioShack Closing 1100 Stores After Same Store Sales Plummet 19%

RadioShack is closing 1,100 underperforming stores, the retailer announced Tuesday morning.

So much for that Super Bowl boost: just one month after surging on the success of a Super Bowl ad triumph, shares of RadioShack are plummeting more than 20% in early Tuesday trading after the electronics retailer released abysmal fourth quarter fiscal 2013 earnings results that included a same-store-sales drop of 19% and news that the company is closing 1,100 under-performing stores.

RadioShack reported $935 million in fourth quarter revenue, a 20% decrease over the $1.17 billion reported for the same quarter in 2013 and missing Street expectations of $1.12 billion. Its net loss widened from the $63.3 million reported last year to $191.4 million for the fourth quarter of 2013, resulting in a loss of $1.90 per share. Analysts had been expecting a loss of just 16 cents per share.

The retailer's full-year 2013 revenue came in at $3.43 billion, a decline from the $3.83 billion reported for full-year 2012. Comparable store sales were down 8.8% and the company's net loss widened to $400.2 million, or $3.97 per diluted share, up from the net loss of $139.4 million reported last year.

Though special charges from the release of inventory reserves, goodwill impairment charges and losses from debt extinguishment contributed to the disappointing quarterly results, the largest culprit of the sales loss was a bad holiday season that saw a 19% same-store sales decline and, according to CEO Joseph Magnacca, 'intense promotional activity particularly in consumer electronics, a very soft mobility marketplace and a few operational issues,' he said in a statement Tuesday morning. Magnacca emphasized that the company is seeking to make progress on its turnaround plan and is revamping product assortment, 'reinvigorating the stores' and boosting operational efficiency.

In an effort to achieve that operating efficiency, RadioShack is closing 1,100 stores in under-performing markets. RadioShack said that in making the decision, it selected stores based on location, area demographics, lease life and financial performance. The store closures are subject to the approval of RadioShack's lenders from its 2018 credit agreement.

The company did not provide guidance for either full-year or first quarter 2014, with Magnacca saying only that the company has a 'detailed strategic path to profitability' and that the whole RadioShack team is focused on execution and improving the company's performance.

Following the news of the sales decline and earnings loss, shares of RadioShack plummeted more than 20% in Tuesday's pre-market trading session and are currently down 66 cents, or 23.9%. Year over year, the stock is down 9.3%.

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