Consumer electronics retailer RadioShack Corporation (Fort Worth, Texas, U.S.) today reported net income of U.S. $108.5 million or $0.75 per diluted share for the quarter ended September 30, 2005, versus net income of $69.7 million or $0.43 per diluted share for the quarter ended September 30, 2004.
Third quarter 2005 net income was favorably impacted by a non-cash, non-recurring gain of $56.5 million or $0.39 per diluted share due to the reversal of a tax contingency reserve. Total sales in the third quarter of 2005 were up 8 percent to $1,194.7 million, compared to total sales of $1,101.5 million for the previous year. Third quarter 2005 comparable store sales were up 1 percent versus the prior year. Year-over-year changes in total sales, comparable store sales, and wireless sales all improved from July through September. Gross margin declined 300 basis points primarily due to an aggressive inventory clearance sale.
“We made important progress during the third quarter to better position ourselves for the holiday selling season and the long term,” said RadioShack President and CEO David Edmondson. “We made aggressive moves on inventory and finished deploying operating procedures which will improve the customer experience in our stores. We also finalized long-term wireless agreements and returned value to shareholders through an overnight share repurchase transaction which better positions us as a corporation.”
RadioShack announced fiscal year 2005 diluted earnings per share guidance of $2.14 to $2.24. The new annual guidance includes the $0.38 impact of the non-recurring tax gain, as well as other factors that impacted the third quarter. The guidance is predicated upon a number of year-over-year assumptions.
“Our outlook for the fourth quarter reflects accelerated comparable store sales driven primarily by rapidly growing categories which tend to carry lower gross margins than the company average,” Edmondson said.
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