More losses, more cost-cutting at RadioShack

RadioShack CEO Joe Magnacca contends the company’s core strategies are working even though evidence of the success was hard to see between a steep third quarter loss and double digit same store sales decline.

Same store sales were down 13.4% in the third quarter ending Nov. 1, driven by traffic declines and soft performance in the mobility business, the company said. Total sales and operating revenue were $650.2 million, compared with $775.4 million last year.

Despite the dismal results, RadioShack's CEO touted success during the Thanksgiving weekend and announced plans to slash costs to help get it back on track.

“Over the three-day Thanksgiving holiday, comparable store sales in our U.S. corporate stores were up 35 percent for our retail segment, while mobility was down 27 percent. It is notable that our core retail efforts are working, even as our mobility category is still experiencing challenges," Magnacca said."We have also begun a detailed set of cost reduction initiatives designed to enhance earnings by over $400 million annually, encompassing a range of operating cost reductions related to headquarters, field, stores and store support to improve operational efficiency and right-size our business, as well as the benefit of targeted store closures.”

RadioShack reported a net loss of $161 million, larger than expected. Sales plunged 16% from a year ago to $650 million, which was also below Wall Street's forecasts. The company also said that it finished the quarter with just $62.6 million in cash and available credit. RadioShack has $841.5 million in debt. A quarter ago, the company had $182.5 million in liquidity and debt of $658 million. In July Moody’s suggested that RadioShack has adequate liquidity to see it through this year, but that 2015 could be a different matter.

Magnacca added that the company is focused on three overarching operational imperatives: reducing costs to end negative cash flow, driving growth and profitability through the retail platform, and returning to a healthy mobility business.