Does RadioShack Corporation (NYSE:RSH) have any chance of survival? The odds are getting slimmer and slimmer with each earnings report, and analysts are increasingly throwing in the towel. One firm even slashed its price target for the electronics retailer to $0 per share.
RadioShack posts a huge miss
In a report dated June 10, 2014, Wedbush analysts Michael Pachter, Nick Citrin and Nick McKay reflect on this week's horrible earnings report. RadioShack Corporation (NYSE:RSH) posted $737 million in revenue, missing their estimate of $773 million and consensus estimates of $767 million. The retailer reported a 13.8% decline in comparable store sales, compared to their estimate of a 7% decline.
On a non-GAAP basis, losses per share were 98 cents per share, excluding a 1 cent per share net benefit. That compares to the Wedbush estimate of 74 cents per share in losses and consensus estimates of 52 cents per share in losses.
RadioShack trying to bail out a sinking ship
The Wedbush team noted that RadioShack Corporation (NYSE:RSH) is focusing on cutting costs, which means it is shuttering up to 200 stores every year over the next three years. Currently the retailer is negotiating with its creditors, which are keeping it from following its previous plan of shutting down up to 1,100 stores over the next year.
However, RadioShack Corporation (NYSE:RSH) is now focusing on other cost-cutting measures like reducing its rent expenses by negotiating with landlords, lowering compensation expenses by "optimizing labor hours and store operating hours" and looking for cost-cutting opportunities in other areas.
RadioShack tries to fix its reputation
RadioShack Corporation (NYSE:RSH) reported that comparable store sales fell 14% in the most recently quarter due to declines in traffic and weakness in its mobility business. In the mobility platform alone, the retailer saw an 18.6% decline as mobile carriers increased their promotional activities and began offering handset financing programs.
The retailer is now trying to boost its image and store traffic through a few avenues. The company is working with PCH Access for its RadioShack Labs initiative. The program is aimed at helping inventors and start-ups "reach brick and mortar locations and provide RadioShack access to unique products." RadioShack Corporation (NYSE:RSH) also said it is expanding its Fix It Here mobile device repair service to cover 700 locations this year. The company said the stores that piloted the program saw higher traffic and store calls.
RadioShack estimates lowered
The Wedbush team said they have cut their 2015 fiscal year revenue estimate to $3 billion from $3.056 billion. They also cut their losses per share estimate to $3.09, compared to their previous estimate of $2.86 per share in losses. Those changes reflect the terrible first quarter results. RadioShack Corporation (NYSE:RSH) did not offer quarterly or full-year guidance in this year's report.
The analysts reiterated their Underperform rating and $1 per share price target, citing growing losses and continued erosion in margins, both of which are made worse as the retailer makes investments with the aim of spurring growth. They said their price target reflects their "best estimate of the brand equity and going-concern value for the business (around $300 million), net of the company's net debt."