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Tandy sales up despite closures

Despite several store closings last year, Tandy reports an increase in sales for January, as it shifts its focus away from first-time computer buyers.

Tandy (TAN) today reported an increase in its comparable store sales for January, as it shifts its focus away from first-time computer buyers.

The company reported sales at stores opened at least a year, also known as comparable sales, rose seven percent over the same period last year.

Tandy's Radio Shack chain was up six percent and its Computer City was up eight percent.

But those positive numbers didn't include the unprofitable stores that Tandy is closing. The electronics company is in the process of closing 53 McDuff stores and 21 Computer City stores.

Analysts say that that is normal. Those numbers would fog up the real picture, and make it more difficult for investors and analysts to determine the company's outlook.

"They are trying to show how the business is doing right now," said Principal Financial Securities' analyst Dennis Telzrow. "If they included those closing stores in the numbers, then I would have to call the company and say 'I don't want to see that.'"

Added Tandy's vice president of investor relations Martin Moad: "To include closing stores when you are going through a liquidation process doesn't make sense."

The company hopes to continue their gains by shifting away from the first-time computer buyer and focusing on the existing computer consumers as well as the SOHO (small office/home office) and corporate markets.

Analysts say working their way into a new market is a slow process.

"The market is there, but it's achieving the right sales approach that the company needs to work on...It takes time," said Janney Montgomery Scott analyst Terence McEvoy.

This approach is a step in the right direction.

Radio Shack is focused on selling products with services, such as the DSS and Prime Star satellite systems. "We also saw strong cellular phone sales, computer sales peripherals, and accessories," added Tandy's Moad.

Tandy will report its fourth-quarter earnings on February 20.

"They will get better from here, but it will be a slow process," added McEvoy. He explained that the money that will be freed up by the closing of stores will enable the company to buy back more stock which increases earnings per share.

"I think [the numbers] will continue to grow, and will be sustained." The positives are under performing stores, Telzrow said.