By Dhanya Skariachan
(Reuters) - Electronics retailer RadioShack Corp
Chief Executive Joe Magnacca, who joined the company in February, said he expected a turnaround to take several quarters.
Sales at the electronics chain have been in free-fall for over a year amid executive departures, cutthroat competition and an image problem. Despite its ubiquitous presence in the United States, analysts say the once-iconic retailer has not done enough to transform itself into a destination for mobile phone buyers or to become sufficiently hip to woo younger shoppers.
The new financial chief is Holly Etlin, a managing director at turnaround firm AlixPartners. Etlin succeeds Dorvin Lively, who resigned to become chief financial officer at Planet Fitness. RadioShack said it was starting a search for a permanent CFO.
The retailer took more discounts to get rid of "unproductive" inventory in the second quarter, squeezing margins. Its net loss widened to $53.1 million, or 53 cents a share, from $21 million, or 21 cents a share, a year earlier.
Analysts, on average, expected a loss of 24 cents a share, according to Thomson Reuters I/B/E/S.
Several days ago, reports surfaced that the struggling retailer was talking to bankers about refinancing its debt. On Tuesday, Magnacca said RadioShack would work with AlixPartners and investment banking firm Peter J. Solomon Co to engineer a turnaround.
RadioShack reported a rise in second-quarter sales at stores open at least a year, its first quarterly increase since 2010.
The company's shares rose more than 6 percent to $3.11 in premarket trading.
"Looking ahead, we expect the turnaround to take several quarters, and during that time our results may vary from quarter to quarter as we make strategic changes to improve our long-term financial performance," Magnacca said.
Second-quarter sales fell 0.5 percent to $845 million, hurt by store closures. Same-store sales - sales at stores open at least a year - rose 1.3 percent. Gross margin was 37.2 percent of net sales, versus 40.1 percent a year earlier.
At the end of the quarter, the company had liquidity of $818 million, including cash and cash equivalents of $432 million and $386 million of available credit. The company's total debt was $713 million.
RadioShack said it plans to pay down the remaining $214 million of its convertible notes maturing in 2013 with cash.
(Reporting by Dhanya Skariachan; Editing by Jeffrey Benkoe and John Wallace)