RadioShack counting on new CEO to provide 'fresh start'

Posted Saturday, Feb. 09, 2013  comments  Print Reprints
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In 2011, newly named RadioShack CEO Joseph Magnacca, then a Walgreen executive, walked the editor of Drug Store News through the flagship Duane Reed-Walgreens drugstore at 40 Wall St. in New York to showcase the store in an online video.

Along the way, the men stopped at the juice bar, walked around the fresh food section, the nail bar and stopped in the beauty section. There, Magnacca demonstrated a kiosk where women can have their picture taken and see how different makeup products will appear on their face. He emphasized how technology played a key role in the store's design.

Magnacca joined Walgreen Co., based outside Chicago, in 2010, when the chain bought the New York pharmacy chain Duane Reade, where he was president. The acquisition came as Walgreen executives wanted to bring new approaches to merchandising to the drugstore chain. He is credited with taking Walgreen through that transformation.

On Monday, Magnacca, 50, will begin another transformation, this one at the struggling Fort Worth-based consumer electronics chain. After several years of leadership from CEOs with financial backgrounds, mostly recently Jim Gooch, RadioShack directors were looking for a merchandiser to lead the company.

Dan Feehan, RadioShack's chairman, said Friday that changes are likely ahead at the company's stores. He called Magnacca a successful business leader with an extensive merchandising background who will provide "an entirely fresh look" for RadioShack.

"It's a fresh start for us," Feehan said. "Everyone on the board is excited about having him in place. He's got the background and experience in the retail arena."

RadioShack said Magnacca would not speak publicly until the company's fourth-quarter earnings report in the next couple of weeks.

Analysts project RadioShack may post a net loss of $72.7 million in 2012, compared with a profit of $72.2 million a year earlier, according to Bloomberg News.

Shares of RadioShack (ticker: RSH) surged nearly 10 percent Friday, to close at $3.42 a share on the New York Stock Exchange.

At RadioShack, Magnacca will receive a $1 million signing bonus, to be paid within 15 days of his start date, a base salary of $1 million and stock options, according to a filing with the Securities and Exchange Commission. He can also earn a $1.2 million bonus this year if he achieves certain performance metrics, the filing states.

At Walgreen, in fiscal 2012 which ended July 31, Magnacca earned $3.2 million in salary and other compensation, according to the company's annual report.

Just a week ago, Walgreen CEO Greg Wasson praised Magnacca for playing a "critical role in our strategy to step out of the traditional drugstore channel and deliver the "Well Experience" to our customers," when he promoted him to executive vice president. He was also serving as president of daily living products and solutions for company's 8,000 stores.

Anthony Chukumba, an analyst with BB&T Capital Markets in New York who is recommending a hold on RadioShack stock, said Magnacca is a great merchandiser. But he's not convinced that is what's needed to turn RadioShack around.

"It looks like a pretty good choice," Chukumba said. "I don't necessarily see that you can wave a magical merchandising wand and your problems go away. It's a credit to them to get someone of his caliber. It's really going to be an uphill struggle."

In January 2012, Chain Drug Review, a trade publication, named Walgreen and five of its executives, including Magnacca, as the 2011 Chain Drug Retailers of the Year.

Magnacca joined Duane Reade in 2008 as its chief merchandising officer.

Sandra Baker, 817-390-7727

Twitter: @SandraBakerFWST

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