Bad News For RadioShack: Weak Margins And CEO Steps Down

The electronic retailer, RadioShack announced today its plans to enhance its existing corporate governance structure amid the departure of the firm’s CEO Julian Day.

Also, the Fort Worth-based company predicted weak fourth-quarter earnings.
Day, who serves as chairman and chief executive is set to retire at the firm’s annual shareholder meeting slated for the week of May 16 and will be succeed by CFO Jim Gooch, the company said.

Along with the rest of its executive changes and design to improve its governance platform, the firm intends to separate the high- level roles. Daniel Feehan who is chief executive of Cash America International, will become chairman.

Moreover, the company’s sales have significantly improved in recent quarters as consumers have begun shopping more than before, but shares plunged in early January when RadioShack announced that Sam’s Club will inherit its 400-plus kiosks that the company had operated in its warehouse and according to industry observers, this move will hurt its earnings.

As for its fourth quarter earnings, the firm expected to be in the range of 50 cents to 54 cents a share on revenue of about $1.37 billion. But, according to the Wall Street Journal, analysts surveyed by Thomson Reuters were looking for 66 cents and $1.36 billion.

RadioShack explained that its margins shrank as a result of a higher demand for lower-margin wireless handsets and increased markdowns. Due to this, the company sought to enhance its wireless performance, and signed a deal last year with the wireless carrier T-Mobile, in which margins took a spin for the worst.

Meanwhile, Gooch, 43 years old has been in his current position at RadioShack since 2006 and prior to this he spent 10 years at Kmart Corp.

‘It has been a privilege to be a part of the transformation of RadioShack,’ says Day. ‘We have built an organisation that is well positioned for the future, and this is the right time for me to step aside and for the Company to transition to new leadership.’

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