The Shack’s Cracks Revealed: Radio Shack Slides As Business Softens And CEO Exits
Jan. 24 2011 - 7:46 pm | 0 views | 0 recommendations | 0 comments
By ERIC SAVITZ
An update: In a post two weeks ago, I noted that Radio Shack (RSH) shares had begun to come under pressure on Wall Street concerns that sales at its mobile phone operations could be hurt by the arrival of the Apple (AAPL) iPhone at Verizon Wireless (VZ, VOD), the only one of the four major U.S. wireless carriers with which the retailer does not have a distribution deal. Also pressuring shares at the time were concerns that gadget sales were weaker-than-expected in the Christmas shopping season, as well as the news that the company is about to lose its agreement to operate kiosks in Wal-Mart’s (WMT) Sam’s Club stores.
Well, it turns out the troubles are real.
This morning, Radio Shack announced that CEO Julian Day will retired as chairman and CEO effective May 16; he’ll be succeeded by CFO Jim Gooch, who becomes president of the company effective immediately, and will take the CEO slot once Day departs. The company named Daniel Feehan, now the presiding director and a board member since 2003, as non-executive chairman.
Why is he leaving? Well, maybe it has something to do with this: the company also said that it expects to report Q4 sales of $1.37 billion, up 4% from a year ago, with just 1% growth in comp-store sales. The company expects to report profits of 50-54 cents a share, down from 60 cents a year ago, on somewhat fewer shares outstanding. While sales were almost in line with Street estimates, profits are going to be well short of the Street consensus at 67 cents. Radio Shack noted that gross margin fell “primarily due to the disappointing performance of the company’s T-Mobile business, a higher sales mix of lower margin handsets, and incremental promotional and clearance markdowns associated with seasonal well-through and product transitions in non-wireless platforms.”
Sounds like they need a new CEO…
RSH today fell $1.99, or 11.3%, to $15.62. |
