In a nation where an estimated 94 percent of the population lives within five minutes of a RadioShack store, it seems that not enough of them have been stopping in to buy something this Christmas season.
Tandy Corp., the parent company of the 7,000-store RadioShack chain, said yesterday that same-store sales for the first two weeks of December were below expectations, quickly sending the firm's stock into a swoon. By the end of the day the price of Tandy shares had fallen almost 20 percent, or $13, to $53, their biggest one-day drop since the stock market crash on Oct. 19, 1987.
The company said it had failed to order enough low-priced computers and digital wireless telephones, causing it to fall short of a prediction that sales would rise 8 percent to 10 percent in December. Tandy officials said wireless telephones account for nearly 70 percent of RadioShack sales.
In a conference call yesterday, Tandy Chairman Leonard H. Roberts blamed the sales performance on the product shortage and said that had the stores had the phone products to sell, "we'd be well into plan and above plan." Roberts called the situation "a temporary issue." Same-store sales at RadioShack were up 17 percent in November.
Tandy said yesterday that it expects to achieve double-digit sales gains for both the year and the fourth quarter. RadioShack will report its results for all of December on Jan. 6.
The company also said it expected to meet fourth-quarter profit forecasts of 62 cents a share, the average gain predicted by analysts surveyed by First Call/Thompson Financial.
Analyst Harry Katica of Prudential Securities Inc. said the sales report was "a little disappointing" but that he was not worried about it. "I'm confident they will be able to show improvement over the balance of the month," he said.
Katica attributed the problem to Tandy underestimating the demand for digital wireless phones. He said at least some of that demand was prompted by a major advertising campaign for the phones by AT&T Corp. at the start of the Christmas season, which got "everyone sensitized to digital."
Same-store sales figures are considered important in the retail industry because they eliminate the variation from stores that are opened or closed during the selling year, much the way adjustments are used to eliminate seasonal factors in economic statistics.
Tandy said that starting this weekend it will institute special promotions in an effort to lure customers into its stores to buy personal computers and wireless phones. "We believe the demand is there," said Tandy spokeswoman Laura Moore.
In the meantime, Tandy shareholders can console themselves with the fact that at this time last year the company's stock was selling for $19 a share.
CAPTION: Falling Fast (This chart was not available)