DALLAS -- RadioShack Corp.'s troubles deepened yesterday, as the electronics retailer announced it would close up to 10 percent of its 7,000 stores after a report of weak fourth-quarter earnings.
At an investment conference at RadioShack's Fort Worth, Texas, headquarters, where the news was released, president and chief executive David Edmondson apologized to investors over "misstatements" on his resume.
Edmondson vowed to reverse the company's fortunes with an 18-month turnaround plan to slash costs and replace slow-moving goods with hot sellers.
Though there is wide agreement that RadioShack needs a turnaround plan, it is unclear if Edmondson, embroiled in personal controversy, will be able to lead it.
For his part, Edmondson projected confidence despite his own travails, first disclosed in newspaper reports earlier this week.
"What we now realize is that we must move in a more bold, aggressive manner and with a greater degree of urgency and speed," he told investors and analysts at the annual event. But investors dumped the stock yesterday. The share price dropped by $1.67 to $19.08, an 8 percent plunge.
Wall Street analysts sounded dire warnings about RadioShack's future.
"RadioShack's results, and more importantly the guidance for next year on cash flow, point to a company in a virtual state of collapse," wrote Gary Balter, an analyst with Credit Suisse Group, in a report yesterday.
For the quarter, RadioShack's net income fell 62 percent to $49.5 million, or 36 cents per share, from $130.9 million, or 81 cents per share, in the year-earlier period. Sales rose 4.9 percent to $1.67 billion.
For the full year, net income fell to $265.3 million, or $1.78 per share, down from $337.2 million, or $2.08 per share, in 2004.
Sales rose 5 percent to $5.08 billion.
One culprit behind the fall in fourth-quarter profits was a $62 million inventory writedown. RadioShack also attributed the decline to sluggish sales of profitable items such as wireless-related products.
RadioShack plans to close 400 to 700 stores at a cost of as much as $90 million.
Top executives will be meeting with regional managers in the coming weeks to decide which stores to close, said Claire Babrowski, executive vice president and chief operating officer.
In addition, RadioShack said it would close two distribution centers, one in Mississippi and one in South Carolina.
The disappointing financial results capped a week in which RadioShack's board of directors said it would hire an independent counsel to investigate Edmondson's portrayal of his academic credentials.
On Wednesday, Edmondson admitted that his resume contained "erroneous information" after a report by The Fort Worth Star-Telegram questioned whether he had received a college degree.
Edmondson has maintained that he received a theology degree from an unaccredited California institution called Pacific Coast Baptist Bible College, which later relocated to Oklahoma and renamed itself Heartland Baptist Bible College.
Edmondson apologized in a statement Wednesday evening and again during the session yesterday.
In a subsequent conference call with reporters, a RadioShack official cut off questioning about the controversy after reporters grilled Edmondson on his ethics.
Edmondson is awaiting trial in April on a driving while intoxicated charge.
Brendan M. Case writes for The Dallas Morning News.