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July 22, 1998

TANDY TAKES $73M CHARGE TO EXIT COMPUTER CITY DEBACLE

By CBR Staff Writer

Tandy Corp, the giant Texas-based electronics retailer which owns the 6,900 strong chain of RadioShack outlets, has revealed a $73m provision against the loss it will make on selling its poorly performing chain of Computer City stores to CompUSA Inc. The loss was disclosed as part of the second quarter earnings announcement which showed net losses of $20m resulting from the charge, compared to last year’s profits of $29m. Revenues for the quarter rose 4% to $1.2bn. Tandy confirmed last month that it would be selling its ill fated venture into computer retailing to concentrate on its highly profitable core RadioShack business, a move which prompted whoops of joy from its shareholders as the stock jumped from the low forties to the mid fifties. Tandy sold the 90 Computer City outlets for $275m but still booked a net loss on the deal. According to figures released by the company on Wednesday, the Computer City chain was generating sales of around $1.8bn annually, some 60% of Tandy’s total revenues. But it transpires that the chain has cost Tandy $46m in operating losses for first half 1998 alone, with revenues falling 13% over the same period. Excluding Computer City, Tandy’s other revenues grew by 11% in the half with profits growing 23% to $91m.

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