Radio Sacked

April 28 (Bloomberg) -- Radio ShackCorp., the third-largest U.S. electronics retailer, plunged the most in almost six years after first-quarter profit fell more than analysts estimated on slowing sales of wireless-telephone plans.

RadioShack declined $2.35, or 13 percent, to $15.15 at 12:18 p.m. in New York Stock Exchange composite trading, the steepest drop since August 2002. The shares more than doubled in the year after Julian Day, a former Kmart Holding Corp. chief executive officer, took over RadioShack in July 2006. After peaking last June, the stock dropped 50 percent through last week.

Sales fell 4.4 percent, the seventh straight decline, and profit dropped for the first time in eight quarters. Day, who had previously bolstered earnings by cutting costs, failed to stem the deterioration in income from wireless phones and plans. Higher advertising costs also eroded profit.

``We're definitely seeing evidence the cuts are fading and now it's a revenue story,'' Scott Tilghman, an analyst with Soleil Securities Corp. in Baltimore, said in a telephone interview. ``We're not seeing profitable top-line growth.''

Profit dropped to $38.8 million, or 30 cents a share, from $42.5 million, or 31 cents, a year earlier, Fort Worth, Texas- based RadioShack said today in a statement. Sales declined 4.4 percent to $949 million. The shares fell 7.5 percent.

Profit included a gain of about 3 cents a share related to an income-tax issue in Puerto Rico, said Tilghman. Excluding that, profit was 27 cents, he said.

Analysts estimated earnings of 29 cents a share, the average of 16 projections in a survey by Bloomberg. The sales estimate was $945.2 million.

Revenue from less-profitable items, such as global- positioning devices, video game consoles and digital cameras, advanced.

Same-Store Sales

Sales in stores open at least 12 months fell 4 percent, less than some analysts estimated. Rick Weinhart, an analyst with BMO Capital Markets Corp., predicted an 8 percent drop in a research note April 22. Horvers expected a decline of 4.6 percent. Sales in such stores, a measure of retailer health because it discounts the effect of new stores, have dropped for nine straight quarters.

Growth in wireless sales, which make up about a third of revenue, fell after RadioShack switched to AT&T Inc. plans from Verizon Wireless in 2006. Fewer sales of Sprint wireless plans contributed to the sales decline, RadioShack said today.

Sales trends improved in the quarter, Day said in the statement. Same-store sales fell an average of 1.2 percent in February and March.

Gross margin, the share of sales after subtracting the cost of goods sold, narrowed to 47.4 percent from 49.9 percent on sales of less-profitable items and more advertising, the company said.

To contact the reporter on this story: Mark Clothier in Atlanta at mclothier@bloomberg.net