Reeling from questionable direction, flat sales and its widest quarterly loss in more than 15 years – not to mention suffering a 73% decline in its share price in 2012 -- RadioShack unplugged Jim Gooch with "immediate effect" yesterday after only 16 months on the job as president, CEO and member of the board.
Its very name evokes the marvels of a time when the Charleston was the rage, talkies were right around the corner and the Depression was something that happened in the 1870s. Oh, and there was no Amazon, Walmart or Apple stores undercutting prices and offering more choices.
The company also is facing increasing competition from Best Buy, another stumbling electronics retailer, as it opens smaller stores dedicated to selling mobile phones, e-readers and tablets, Leslie Patton and Chris Burritt report on Bloomberg News.
They quote BB&T Capital Markets analyst Anthony Chukumba, who writes in a note that “Gooch simply was not effective, and a change clearly needed to be made.” That said, Chukumba points out that “the start of the crucial holiday selling season is less than two months away,” raising questions about the timing of dismissal.
“The board decided the timing was right,” RadioShack spokesman Eric Bruner responds via e-mail. “This was a mutual decision in the best interest of the company.”
"We thank Jim for his service to the company and wish him well in his future endeavors," Daniel R. Feehan, non-executive chairman of the board for RadioShack, says in a brief statement on the company’s website.
“The real challenge for someone like RadioShack is driving traffic to their stores,” Oppenheimer & Co analyst Brian Nagel comments in the Bloomberg piece. “They have a store format that is largely ineffective -- it’s too big to sell wireless and too small to sell most other product categories.”
Wedbush Securities analyst Michael Pachter tells Reuters’ Arpita Mukherjee and Juhi Arora that RadioShack’s name is definitely a problem: “Radio is a concept from a hundred years ago, and a shack is a place that essentially homeless people lie in.” And that may be one reason why “[older customers] are not being replaced by 30 year olds,” as Pachter points out.
Barry Shlachter, who writes for the Star-Telegram in Fort Worth, Texas, where RadioShack has its headquarters, found a somewhat upbeat analyst who is looking beyond the “increasingly significant” challenges such as its “shift in product mix from higher-profit consumer electronic items to lower-profit mobile phones.”
"First, we view RadioShack as the convenience store of the consumer electronics sector," says KeyBanc Capital Markets analyst Bradley B. Thomas. "The company has more than 4,400 stores averaging 2,400 square feet in size, with many in attractive locations and many with shorter leases that provide flexibility."
Adds Shlachter: “Moreover, the chain once had a history of being the most profitable in the consumer electronics sector.” With the “right management” in place, Thomas feels, the company "could defend its niche in consumer electronics retailing."
That team would include a new chief merchandising officer to replace Scott Young, who left in June, and chief marketing officer Lee Applbaum, who departed in March.
RadioShack's chief financial officer, Dorvin Lively, is serving as interim CEO. He joined RadioShack in August 2011 from Ace Hardware and has worked in top finance positions at a number of consumer products companies, including Maidenform Brands, Toys R Us, Reader’s Digest and Silverado Foods.
Forbes contributor TJ McCue has a suggestion for RadioShack’s future direction: “Hire the best search engine optimization/search engine marketing guys on the planet … and start creating content that solves their customer’s pain.”
What sort of pain? The numerous bullet points McCue offers can really be boiled down to one:
"[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," Morris Ajzenman of Griffin Securities tells Reuters.
RadioShack’s heritage dates back to RadioShack itself, which was a retail and mail-order operation established in Boston in 1921 to serve the needs of radio officers aboard ships, and Hinckley-Tandy Leather Company, an enterprise that opened in 1919 to supply supplied parts to shoe repair shops in Fort Worth.
“Amidst the break-neck innovations in consumer electronics and personal technology, RadioShack has steadfastly maintained its position as an enduring American brand,” reads a corporate history. That it is. But whether it can maintain its position as a viable company is really the question at hand.