RadioShack (RSH) released results Tuesday and investors ough to be very pleased.
“The Shack” posted a 20% increase in Q4 net income as the retailer’s turnaround effort continues to take hold despite falling wireless-phone sales. Mostly selling accessories, batteries and other gadgets for wireless products, RSH said net income rose to $101 million, or 77 cents a share, from $84.5 million, or 62 cents a share, a year earlier. Net Income was favorably impacted by improved gross margin, a reduction in SG&A, and reduced interest expense when compared to the prior year.”Analysts” had expected 72 cents a share.
Revenue fell 6.4% to $1.36 billion as same-store sales dropped 6.7% on lower wireless and satellite-radio sales. In October, RadioShack predicted a “challenging” fourth quarter because of both weakened demand and competition. If this is “challenging” I would love to see “optimistic”.
CEO Julian Day, a former executive at Sears Holdings (SHLD) said, “I am delighted to announce that our team here at RadioShack once again produced strong improvement in our operating profit for the fourth quarter, and for the year as a whole. It is a testament to the hard work and devotion of everyone concerned, that this result was achieved against a background of difficult and uncertain economic conditions.”
Its cash balance increased $38 million at the end of the fourth quarter of 2007 to $510 million, driven by improved working capital management and cash generated from net income. It was partially offset by $150 million repayment of bonds in September, 2007, and $209 million of share repurchases during 2007.
The best numbers was that the chain generated $300.9 million in free cash flow through the twelve months of 2007 versus free cash flow of $189.9 million for the same period in 2006.
On a day that we see what bad management can do to a company (at Circuit City (CC)), the results at RadioShack (up 16% Tuesday) show us what good management can do.
Disclosure (“none” means no position):Long SHLD, none
