Tags: RadioShack | CEO | chief | Revival

RadioShack CEO Steps Down as Company Tries to Hasten Revival

Wednesday, 26 Sep 2012 10:59 AM

RadioShack Corp. Chief Executive James Gooch stepped down on Wednesday, as the once-iconic electronics retailer seeks to revive its fortunes after a series of strategic setbacks.

"The board decided that the timing was right," said company spokesman Eric Bruner.

"Moving forward with the decision sooner rather than later will help establish the right leadership to address the company's challenges."

RadioShack's shares, which have fallen more than 80 percent since Gooch took over last May, were down 0.8 percent at $2.54 in morning trading.

RadioShack, famous in the vacuum tube era as a hangout for radio and electronics enthusiasts, has been increasingly focusing on selling low-margin phone calling plans and smartphones, particularly the Apple Inc. iPhone.

Mirroring the fortunes of other electronics retailers such as Best Buy Co. Inc., the company's operating margins shrank to 3.5 percent in 2011 from 8.7 percent in 2009.

Operating margins could decline to -0.1 percent in 2012, Bradley Thomas of KeyBanc Capital Markets said in a note.

RadioShack, whose joint venture with Target Corp (TGT.N) has fallen short of expectations, is also facing increasing competition from Wal-Mart Stores Inc (WMT.N) and online retailers such as Amazon.com Inc.

"If you see what is going on with Best Buy, this space is having a very difficult time now," said Morris Ajzenman of Griffin Securities.

"There is no sign of fundamental improvement," he said. "I am absolutely not surprised (at Gooch's departure)."

RadioShack reported an unexpected net loss $21 million for the second quarter and suspended its dividend to help pay down its debt, which stood at about $680 million as of June 30.

OUT WITH THE OLD

Michael Pachter of Wedbush Securities said one problem facing RadioShack is its name, which conjures up images from another era. "Radio is a concept from a hundred years ago, and a shack is a place that essentially homeless people lie in."

RadioShack also faces a demographic challenge, he said.

"(Older customers) are not being replaced by 30-year-olds," said Pachter, who has an underperform rating on the stock.

RadioShack said its board was conducting a search for a successor and would not rule out internal candidates.

Finding a new CEO may not be easy, Alan Rifkin of Barclays Capital wrote in a note, saying the new leader would need "unique strategic vision" to fix all of the retailer's problems.

"Furthermore, the duration of the search is uncertain, thus leaving RadioShack in a state of transition," he said.

The company, which has a market value of about $255 million, was bumped off the S&P MidCap 400 index this week because its market capitalization had shrunk so much that it didn't even quality for the S&P 1500. The shares have lost nearly three quarters of their value this year.

Chief Financial Officer Dorvin Lively will be the acting CEO to replace Gooch, 44, who joined RadioShack as CFO in 2006.

"(The future) depends on who they bring in and what vision they bring in for the company to turn this cruise ship around. It is no longer cruising, it is sinking," Ajzenman said.

© 2017 Thomson/Reuters. All rights reserved.

 
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U.S. consumer electronics chain RadioShack Corp said Chief Executive James Gooch stepped down, as the once-iconic retailer seeks to revive its flagging fortunes after a series of strategic setbacks.
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Wednesday, 26 Sep 2012 10:59 AM
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