• by Sarah Mahoney  @mahoney_sarah, July 25, 2008

Buoyed by strong initial sales of digital-to-analog TV converter boxes, GPS units, video gaming, and prepaid wireless phones, Radio Shack says its same-stores sales gained 6.9% in the second quarter.

But the company says that even though results are improving in its Sprint post-paid business, that line is still a major drag on results. Excluding Sprint postpaid and related wireless accessory business, "comparable store sales in the second quarter would have increased 12.7%," the company says.

Still, the Fort Worth, Texas-based electronics retailer says it saw a "significant improvement" in its AT&T post-paid business.

Total sales rose to $995 million, $935 million for the same period last year. Online sales jumped 29.8%.

Operating income gained 10%, while its net income fell to $41.4 million, from $47 million in the same period a year ago. (Income was affected by a $4.3 million adjustment to the lease for its corporate headquarters.)

"The economic environment continues to be challenging," the company says, "however, as a credit to our team, we are pleased with our progress as we begin to drive profitable growth."

Experts say the sale of converter boxes are expected to be a boon for electronics retailers in the months ahead. The transition to digital-only for full-power television broadcast signals in the U.S. is scheduled to take place in the first quarter 2009. After that, older TVs-a market that industry estimates put at 25 million to 30 million households--won't work without a converter box, which range from $40 to $70 each.

But while the government has established a program to provide two free $40 coupons per household, many consumers are still unaware of the change.