FORT WORTH -- RadioShack on Wednesday unceremoniously dumped Jim Gooch, its CEO of 16 months who not only failed to turn around the ailing consumer electronics retailer or find a takeover suitor, but also saw its performance decline more during his tenure.
The removal of the 45-year-old Gooch -- a tall, imposing executive who like his predecessor Julian Day kept an extremely low public profile in the community -- wasn't wholly unexpected."This news does not come as much of a surprise given the company's ongoing operating woes and dismal stock price performance," Dan Wewer, an analyst with Raymond James Equity Research, said in a research note.Like many established brick-and-mortar chains, Fort Worth-based RadioShack has struggled to compete with online discounters like TigerDirect.com and Amazon.com while facing greater competition from big box retailers like Wal-Mart and direct-selling manufacturers like Apple Inc.RadioShack's share price has declined 73 percent since Jan. 1, and it's down 84 percent since Gooch took over as CEO. On July 25, the retailer, formerly known as Tandy Corp., reported an unexpected $21 million quarterly loss, compared with a $24.9 million profit during the same period of 2011. Its quarterly dividend was suspended.On Wednesday, the company's shares (ticker: RSH) closed at $2.60, up 4 cents or 1.6 percent.Gooch was removed with "immediate effect" from his posts as president, CEO and board member, the company said, without giving any reason.Chairman Dan Feehan said efforts to find a replacement had begun. He said executive search firms have been narrowed to a list of several companies. In the meantime, RadioShack's chief financial officer, Dorvin Lively, is interim CEO.Feehan, also CEO of Fort Worth-based Cash America International, said no particular event led to Gooch's firing. He said it was not an abrupt action."The board decided it was time to move." Feehan said in a telephone interview. "Anytime the board deals with a leadership change ... it is deliberated, and it took plenty of time."He specifically denied a news report that Gooch was removed after making misleading statements."Nothing could be farther from the truth," said Feehan, who praised Gooch's character as an executive.It was apparently a reference to a class action lawsuit that New York law firm Levi & Korsinsky said it launched this month against RadioShack, alleging that Gooch made "materially misleading statements" that hurt investors who bought shares between July 26, 2011, through July 24, 2012.Gooch was hired by former CEO Julian Day as RadioShack's chief financial officer in 2006, shortly after Day took over. He had worked with Day previously at Kmart and its successor company, Sears Holding.Unlike Pier 1 Imports, which saw a dramatic turnaround under its CEO, Alex Smith, a career merchant, Gooch was tapped by RadioShack as a financial specialist. Considered a number whiz since childhood in Grand Blanc, Mich., he studied accounting at Michigan State University, then earned an MBA at Northwestern University's Kellogg School of Management.Based on a federal filing, Gooch will apparently get severance of twice his $837,000 salary and twice an estimated $1.02 million bonus, for a total of about $3.68 million. Other stock bonuses apparently aren't worth anything because their exercise prices have not been reached.His departure is the latest among key RadioShack managers, Wewer noted.The chief merchandising officer, Scott Young, left in June, and Chief Marketing Officer Lee Applbaum left in March. Spokesman Eric Bruner said the search to find replacements continues."Clearly RadioShack is struggling to address the competitive and product cycle challenges facing its mobile, signature, and consumer electronics businesses," Wewer said.If there's any room for optimism, said analyst Bradley B. Thomas of KeyBanc Capital Markets, it's because RadioShack still maintains some competitive advantages and opportunities for improvement."First, we view RadioShack as the convenience store of the consumer electronics sector," Thomas said. "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."Moreover, the chain once had a history of being the most profitable in the consumer electronics sector. And the recent launch of the iPhone 5 could provide a near-term benefit, he wrote. The phone requires new accessories because it's larger and needs a different cable plug."Under the right management team," Thomas said, RadioShack "could defend its niche in consumer electronics retailing."That said, he warned that the chain faces structural headwinds, including a shift in product mix from higher-profit consumer electronic items to lower-profit mobile phones.These challenges are increasingly significant, Thomas said, adding that he doesn't see "any near-term quick fixes."Barry Shlachter, 817-390-7718Twitter: @bshlachterHave more to add? News tip? Tell us
