Consumer electronics retailer RadioShack Corporation announced that its fourth quarter 2002 earnings per share will not meet its previously stated forecast of U.S. $0.63-$0.68. Rather, the company believes its fourth-quarter earnings per share are more likely to be $0.58-$0.60.
"Though year-over-year sales changes improved every month during the quarter, sales were consistently a little lower than our plan throughout the three-month period," said Leonard Roberts, chairman and CEO. "In addition, gross margin trends, beginning in November, aggravated the earnings picture."
Among the more significant drivers of RadioShack's earnings shortfall were weaker than expected performances in the following merchandise categories:
Sales and gross margin of Sprint PCS products and service beginning in November,
Sales of (non-micro) radio controlled toys,
Sales of specialty batteries tied to radio controlled toys, and
Sales of select home entertainment accessories tied to DVD players.
RadioShack reiterated it still expects 13-15 percent annual earnings per share growth from 2003 to 2005. The company's expectation is based on the following assumptions:
Sales growth of 2-3 percent,
Gross margin improvement of 70 to 80 basis points,
SG&A growth of 1-2 percent and
An active, continuing share repurchase program.
RadioShack will release fourth quarter 2002 sales on Tuesday, Jan. 14, 2003, before the market opening.
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