It looks like all the iPhone trade in deals over the last year didn’t help Radio Shack earnings as much as they had hoped. Radio Shack announced last week that Chairman and Chief Executive Officer Julian Day would be stepping down, and that fourth-quarter earnings will be “disappointing”.
Julian Day was brought into pull Radio Shack out of the doldrums as it has struggled with competition from bigger electronic box stores and discount online retailers. Unfortunately, Mr. Day was not able to turn around Radio Shack like he did KMart, pulling the company out of bankruptcy in 2006.
Radio Shack has recently focused on smartphones and wireless plans in its own stores as well as installing kiosks in many Target stores. These kiosks incurred higher costs than were anticipated thus decreasing profit margins. Radio Shack has also commented that the T-Mobile portion of the business plan had a “disappointing performance”, and that smartphones in general have lower profit margins than other product lines.
Julian day will officially retire as chairman, CEO and a director at its annual shareholders meeting on May 16. His duties will be split. James F. Gooch, 43, the chief financial officer will become president and chief executive. Mr. Gooch will become president immediately and will assume the chief executive’s position on May 16 when Day officially retires.
Daniel R. Freeman will take on the duties of non executive chairman of the board. Freeman has been a director since 2003 and is currently CEO of Cash America.
Upon the announcement Radio Stock stock fell $1.99 or 11% to close at $15.62.
Radio Shack will need to implement a strategy to help increase profit margins in the cellular portion of the business or attempt to adopt a new business plan to remain competitive.
Do you think Radio Shack’s best days are behind them? Is Radio Shack still a player in the consumer electronics retailing? When was he last time you went to a Radio Shack? Let me know in the comments below.