RadioShack said CEO Jim Gooch stepped down from the company after 16 months at the helm as the ailing retailer struggles to find its identity in wireless and in a changing retail landscape.
The company did not give any specific reason for Gooch's departure. CFO Dorvin Lively will serve as acting CEO while the company searches for a permanent replacement.
Gooch's departure comes less than a month after RadioShack launched its own prepaid branded wireless service powered by Leap Wireless' (NASDAQ:LEAP) Cricket Communications. The venture, dubbed RadioShack No-Contract Wireless, began service Sept. 5. RadioShack continues to sell products for Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T) and Sprint Nextel (NYSE:S).
Despite a shifting focus in the past few years toward the sale of smartphones and tablets, RadioShack has struggled. The company's stock has lost 80 percent of its value in the past year. The company's market value now stands at around $255 million, and according to Reuters it was pushed off the S&P MidCap 400 index this week after its market capitalization was deemed too small for it to be included in the S&P 1500.
RadioShack reported a loss of $21 million for the second quarter, compared with a year-earlier profit of $24.9 million. Revenue climbed 1.2 percent year-over-year, with wireless sales up 3.3 percent. Yet the retailer has struggled recently in the face of tough competition from online retailers like Amazon and larger competitors in the brick-and-mortar business, including Walmart. In August 2010 Target launched a full-service mobile retailing business in its stores operated by RadioShack, but that effort has failed to gain much traction.
"Gooch simply was not effective, and a change clearly needed to be made," BB&T Capital Markets Anthony Chukumba wrote in a research note, according to Bloomberg. He rates the shares hold. "We find the timing a bit curious given the fact Gooch was CEO for just over a year and the start of the crucial holiday selling season is less than two months away."
Finding a permanent CEO for the storied electronics retailer may be a challenge since it new leader would need "unique strategic vision" to fix the company's troubles, Barclays Capital analyst Alan Rifkin wrote in a research note. "Furthermore, the duration of the search is uncertain, thus leaving RadioShack in a state of transition," he said.
- see this release
- see this Reuters article
- see this Bloomberg article
- see this WSJ article (sub. req.)
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