RadioShack Corporation announced a net loss of U.S. $3 million or ($0.02) per diluted share for the quarter ended June 30, 2006 versus net income of $52 million or $0.33 per diluted share for the quarter ended June 30, 2005. Earnings results were adversely affected by lower sales of wireless, particularly post-paid products, in RadioShack company-operated stores. Costs in connection with the company's turnaround plan and related restructuring activities including lease terminations, store liquidation activities, inventory reserves, and fixed asset write-downs reduced the company's pre-tax earnings by $21 million. RadioShack also incurred a pre-tax expense of $8.5 million in connection with the preliminary settlement of certain wage- and-hour class action lawsuits.
Second quarter 2006 comparable store sales were down 3 percent versus the prior year. Total sales in the second quarter of 2006 were up 1 percent to $1.1 billion, compared to total sales of $1.092 billion for the previous year.
The main driver of second quarter total sales was wireless. Total wireless sales were up 2 percent. More than all of the growth was a result of 126 more wireless kiosks in operation over the prior year. Post-paid wireless handset unit sales in RadioShack core-stores were down a double-digit percentage.
Second quarter 2006 gross margin rate was 47.2 percent versus 50.7 percent the previous year, a decline of 351 basis points. Approximately 150 basis points of the gross margin decline was due primarily to liquidation markdowns.
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