RadioShack CEO Julian Day Retiring
NEW YORK (AP) – RadioShack said Monday its chairman and CEO Julian Day is leaving and announced disappointing fourth-quarter guidance that sent shares down 12 percent in midday trading.
RadioShack has struggled with competition from online retailers like Amazon.com and bigger electronics players like Best Buy. It brought on former investment banker Day — known for pulling Kmart out of bankruptcy — as chairman and CEO in 2006 to help turn around results.
Since then the company has shifted its focus to smartphones and wireless plans and mobile phone kiosks with some success. But Monday it said “disappointing performance” from its T-Mobile business and a shift in sales toward lower margin handsets hurt results in the fourth quarter. Smartphones such as the iPhone, which RadioShack recently began carrying, have a lower margin than other products.
The company also had higher expenses as it invested in rolling out mobile kiosks in Target stores.
RadioShack said Day, 57, will retire as chairman, CEO and a director as of its annual shareholder meeting on May 16.
His duties as CEO and chairman will be split up. Jim Gooch, 43, the current chief financial officer, will become president and CEO. Gooch was named president effective immediately as part of the company’s succession plan, and will assume the CEO post upon Day’s retirement.
Daniel R. Feehan will become non-executive chairman of the board. He has been a director since 2003 and is currently president and CEO of Cash America International Inc.
RadioShack, based in Fort Worth, Texas, said it expects fourth-quarter earnings of 50 cents to 54 cents per share, far below the 67 cents per share analysts are expecting and below the 60 cents per share RadioShack earned a year ago.
Fourth-quarter revenue is expected to rise 4 percent to $1.37 billion from $1.32 billion last year, matching analyst expectations.
Revenue in stores open at least one year rose 1 percent. The measure is important because it excludes stores that open and close during the year.
Bank of America Merrill Lynch analyst Alan Rifkin said that while RadioShack has seen “material growth” in its wireless business, comparisons are getting more difficult. In addition, the company said earlier this month in a regulatory filing that its agreement to run 417 Sam’s Club kiosks will end in March.
The company’s Target kiosks “will likely take time to gain traction and it will likely be hard for the initiative to truly over-compensate for the loss of the more-established Sam’s business, at least in the near-term,” he said.
Rifkin reiterated his “Underperform” rating on the stock
RadioShack expects to report final results for the quarter during the week of Feb. 21.
RadioShack was the target of takeover speculation last year but nothing materialized. Instead, the company has bought back nearly $400 million in shares since August.
Shares fell $2.06, or 11.7 percent, to $15.55 in midday trading.
(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)