RadioShack's contract dispute with T-Mobile is still unresolved

RadioShack's first-quarter net profit tumbled, and it said it continues to suffer weakness in postpaid wireless sales of T-Mobile USA service. The retailer also said it is still locked in negotiations with T-Mobile over a contract dispute.

RadioShack, which restructured its business into three main product platforms--mobility, consumer electronics and signature (which includes accessory, power, service and technical platforms)--posted net profit in the first quarter of $35.1 million, down from $50.1 million in the year-ago period. RadioShack said its net sales rose slightly to $1.06 billion, up 2.1 percent from $1.04 billion in the year-ago quarter.

However, RadioShack's mobility business saw sales jump 11 percent year-over-year. RadioShack said it scored a $28.9 million boost in sales generated by kiosks, and said it expects to expand its Target Mobile kiosks to around 1,450 locations by the end of June, up from 887 at the end of March. The company also said it will start selling tablets this month.

Despite the mobile wins, RadioShack said it continues to suffer due to its relationship with T-Mobile. RadioShack said that comparable store sales for company-operated stores and kiosks decreased 0.6 percent in the quarter, which RadioShack primarily blamed on the decline in T-Mobile postpaid sales.

RadioShack said it continues to work closely with T-Mobile to resolve what it has termed "material breaches" in its contract with the carrier. The retailer said discussions are "constructive" and that it expects the matter to be resolved, though it did not give a timeframe for doing so.

For more:
- see this release
- see this MarketWatch article
- see this WSJ article (sub. req.)

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