Interesting News
Tandy's Radio Shack Same-Store Sales Rose 12% in June (Update1)
Bloomberg News
July 7, 1998, 11:50 a.m. PT
Tandy's Radio Shack Same-Store Sales Rose 12% in June (Update1)
(Adds analysts' comments; updates stock price.)
Fort Worth, Texas, July 7 (Bloomberg) -- Tandy Corp., the
largest consumer-electronics retailer in the U.S., said June
sales rose 12 percent at its Radio Shack stores open at least a
year, almost twice as much as some analysts predicted.
At the Computer City chain, which Tandy sold to rival
CompUSA Inc. for $275 million last month, same-store sales rose 6
percent.
Total sales at the 6,900-store Radio Shack chain rose to
$246.8 million from $216.1 million in June 1997, Tandy said. The
increase was driven by demand for telecommunications products,
such as cellular telephones and service offered through a
marketing agreement with Sprint Corp.
''Radio Shack's on a path for the next several years where
they will continue to ride the demand wave in the U.S. for
wireless products,'' said Peter Caruso, a Merrill Lynch & Co.
analyst who has a ''buy'' rating on the stock.
Shares of Fort Worth, Texas-based Tandy climbed 1 13/16 to
54 3/4 in midafternoon trading.
Radio Shack sales have surged as it added brand-name
electronics and personal computers made by Compaq Computer Corp.,
and services such as satellite television and electronics repair.
''Some of their bread-and-butter categories have been doing
well, too,'' said Lynn Detrick, an analyst with Sanders Morris
Mundy Inc. in Houston. Sales of batteries, electronic parts and
accessories contributed to the June sales gains, Tandy said.
Dennis Telzrow, an analyst with Hoak Breedlove Wesneski in
Dallas, said he expected a 7 percent increase in Radio Shack's
same-store sales. The 6 percent increase at the 100-store
Computer City chain also exceeded his expectations.
''That's a good number, particularly given what happened at
CompUSA this quarter,'' he said.
PC Problems
Dallas-based CompUSA told investors last week that it
expects to report a fiscal fourth-quarter loss because of falling
personal computer prices and slack demand. Those same factors
prompted Tandy's decision to sell Computer City rather than
continue with a planned spinoff to shareholders.
Both computer retailers have been hurt by increased
competition as more consumers and businesses buy PCs over the
Internet or by telephone from manufacturers such as Dell Computer
Corp. and Gateway 2000 Inc. In addition, the average retail price
for a personal computer has fallen about 17 percent in the past
year.
''Tandy investors are just thrilled to death that Computer
City and its volatility are finally being disposed of,'' Caruso
said.
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