Stifel Equity Trading Desk analysts David A. Schick, Taylor G. LaBarr and Raymond L. Stochel rate RadioShack Corporation (NYSE:RSH) as a Hold as they key in on some important aspects from the RSH FY13 10-K.
RadioShack Corporation FY13 10-K Highlights:
Sales: Net sales fell -10.4% y/y driven by an -8.8% decline in comp. RadioShack Corporation (NYSE:RSH) experience soft sales in many product categories partially offset by growth in prepaid wireless, portable speakers, music accessories, and AC adapters.
Post-paid wireless business: Total postpaid units sold fell -23% y/y in FY13 (vs. -20% y/y in FY12); average cost per unit sold rose +14.3% y/y (vs. +36% y/y in FY12), and average revenue per unit sold increased +7% y/y in FY13 (vs. +19% y/y in FY12).
Gross Margin: Gross margin rate contracted by 430 bp driven by (a) change in sales mix towards higher priced and lower margin smartphones, (b) an inventory write off in 3Q, and (c) more aggressive promotional activities (discounts, clearance, coupons).
SG&A: SG&A fell -0.9% y/y driven by (a) fewer stores in operation and (b) lower severance costs y/y, partially offset by (c) increased professional fees and (d) increased self-insurance costs.
Segment Data: RadioShack Corporation (NYSE:RSH) reclassified its product segments in FY13. By category, Mobility represented 52.4% of FY13 sales (in line with FY12) with total comparable store sales down -9.0% in FY13. Retail (roughly signature and consumer electronics) represented 46.9% of FY13 sales (vs. 46.8% in FY12) with total comparable store sales down -8.5%. Other represented 0.7% of FY13 sales (in line with FY12).
Stores: At year-end, RSH had 4,297 company operated stores (vs. 4,395 in FY12), 0 kiosks (vs. 1,522 in FY12), and 901 dealer outlets (vs. 976 in FY12). There are 274 company operated stores in Mexico (vs. 269 in FY12), 5 dealers and 1 DC. Virtually all retail locations are leased and not owned. RSH had 42 dealer outlets located outside of North America (vs. 32 in FY12). In FY13 RadioShack Corporation (NYSE:RSH) opened 52 retail locations and closed 1,713 retail locations vs. opening 127 retail locations and closing 235 retail locations in FY12.
Property: As of FY13, RadioShack Corporation (NYSE:RSH) owned 2.1 mm square feet of property comprised mainly of manufacturing and distribution facilities and office space, and leased 11.3 mm square feet of property comprised mainly of retail space. RadioShack Corporation (NYSE:RSH) has 3 U.S. distribution centers, one of which acts as a fulfillment center for online orders.
