Jul. 28--FORT WORTH -- RadioShack's second-quarter sales fell, but the company beat Wall Street's profit projections by cutting expenses.

Still, the Fort Worth consumer electronics retailer's stock (ticker: RSH) dropped $1.06 to $15 per share Monday on the New York Stock Exchange because sales were lower than Wall Street expected.

RadioShack said its second-quarter net profit rose to $48.8 million, or 39 cents per share. That compares with a profit of $41.4 million, or 32 cents per share, for the same period in 2008. Wall Street's consensus projections were for a profit of 29 cents per share. Last year's profit was decreased by a $4.3 million one-time charge.

"We are very pleased with the results we reported today, especially considering the very challenging economic times," Jim Gooch, RadioShack's executive vice president and chief financial officer, said in a statement. "Our disciplined approach to operating the company resulted in the strengthening of our balance sheet and significant increase in operating income."

Same-store sales at company-owned stores and kiosks -- those open at least a year, an industry benchmark -- dropped 4 percent. Wall Street was expecting a 3 percent drop.

RadioShack attributed that primarily to declines in sales of wireless accessories, digital TV converter boxes, GPS products, music players and digital cameras.

Stronger sales of netbooks, TV antennas, prepaid wireless handsets and airtime, digital TVs and voice over Internet protocol products helped offset the declines, RadioShack said.

The company pared selling, general and administrative costs by $39.7 million primarily from "decreased advertising and compensation expense." The 2008 quarter's expenses also included a one-time $12.1 million charge and one-time $5.1 million sales tax-related benefit.

RadioShack also continued to increase its cash reserves, to $930.8 million in the second quarter from $814.8 million in the first quarter and $577.8 million a year ago.

About $720 million is in long-term debt, Mike Baker, a Deutsche Bank analyst, estimated. RadioShack issued $375 million in debt notes in August 2008.

The company also kept a lid on inventory, which dropped to $578.2 million in the second quarter, down $48.1 million.

Chief Executive Julian Day praised the company's "impressive financial performance in the first half of 2009." He said RadioShack is looking forward to its addition of T-Mobile Wireless phone products Aug. 19 and its sponsorship of cyclist Lance Armstrong's team beginning next year.

Baker maintained his "long-term hold" rating on RadioShack's stock.

Sales of postpaid wireless products, which Baker estimated amount to one-third of RadioShack sales, rose in the quarter, he wrote in a note to investors.

"As RSH's biggest business, increases here are a particularly favorable development," he wrote.

But he said sales of converter boxes added only $50 million to sales in the quarter, compared with his estimate of $65 million a year ago. The government-mandated switch to digital TV from analog occurred in June.

"We believe the stock should react favorably in the short term due to the big earnings beat," Baker wrote in his note.

"However, the weak [comparable store sales], which will likely get worse as RadioShack continues to cycle the converter box program, could weigh against the longer-term outlook."

Total revenue for the second quarter was $965.7 million, down from $994.9 million.

Through the year's first six months, RadioShack reported a $91.9 million net profit on $1.97 billion in revenue, compared with an $80.2 million net profit on $1.94 billion in revenue last year.

SCOTT NISHIMURA, 817-390-7808

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