Tandy reports net loss
Like many PC resellers this quarter, Tandy announces lower revenue and earnings for its fourth quarter.
The company reported net loss of $137.7 million, a loss of $2.39 a share, for its fourth quarter ending December 31, down from a net income of $90.2 million, $1.39 a share for the same quarter a year earlier.
The company previously announced charges of $3.40 per share resulting in a net loss for the quarter, due to restructuring and other charges.
Without the charges, the company would have reported an income of $1.01 cents share, beating Wall Street's expectations of 94 cents a share, according to First Call.
But Janney Montogmery Scott analyst Terence McEvoy said in addition to restructuring charges, the company was feeling the heat of a bad year overall for consumer electronics.
"It was a lousy environment for audio and video, as well as the personal computer side. Radio Shack did much better than Circuit City. But on a absolute basis, it was a bad year," he said.
The company reported revenue of $2.1 billion, down about $37 million from the same quarter a year earlier.
The company's stock was trading as high as 48-1/4 today, up from yesterday's close of 47.
"Calendar 1996 represented a very difficult year for the entire consumer electronics industry and a major re-engineering year for Tandy," John Roach, chairman and CEO, said in a statement.
Tandy previously announced that its sales slumped five percent in December over the same month of the previous year. It then reported a jump in its January sales at stores opened at least a year, also known as comparable-store sales.
For January, Tandy's Radio Shack chain was up six percent and its Computer City was up eight percent.
"Our strategy for 1997 is focused on major initiatives at Radio Shack and Computer City. Our financial strategy is focused on maximization of cash flow to support our business initiatives and support our share repurchase program to enhance shareholder value," Roach added.
The company hopes to continue the gains that it experienced in January, 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 have said that working 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 McEvoy.
In December, the company said it would sell all 17 Incredible Universe stores and also shut 19 of its 108 Computer City stores in North America.
McEvoy explained that the money freed up by the closing of stores will enable the company to buy back more stock which increases earnings per share.
Over the next couple of months, Tandy should continue to show an improvement in comparable-store sales over the same months a year earlier. McEvoy said that in early 1996, the company was offering big promotions that affected the bottom line. Without those promotions, "you'll see better profits for the next couple of months."
For full-year 1996, the company reported a net loss of $91.6 million, down from a net income of $211 million a year earlier. Tandy reported a revenue of $6.3 billion for 1996, up from $5.8 billion.