This morning RadioShack was lost with the rest of the news out there, but the stock is surprisingly higher on what would be negative news if we weren’t talking about a company in turnaround mode. The company said that calendar Q4 sales were down 7.8% on a same-store-sales basis, but the Christmas 5-weeks from Thangsgiving to December 31 showed a drop of 2.5% after breaking out the sales of prepaid wireless card airtime. Including those numbers same store sales would have been down 5.5%. The reclassifying of these numbers changed the results.
Julian Day, the turnaround CEO, has also said he won’t chase unprofitable business operations, so youcan expect a drop in same-store-sales during the first half of the year. The company said it would exceed its $51 million in Q4 2005, and the street is reading into this is a flooring out period.
Day is also going to resume conference calls after earnings reports after the prior CEO had dropped them. Day is the reason this has been on a Watch List for the BAIT SHOP of takeover candidates, although a Watch List is not an official endorsement. Day has succeeded where others haven’t: if he can keep the profits up, Wall Street is being forced to accept weaker top-line numbers. That’s what happens when you have a strong turnaround manager in place.
Shares are up 11% at $18.65 on almost 10 million shares today.
Jon C. Ogg
January 8, 2007
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