If you hear word associations sometimes, what is the first competing company that would come to mind when you hear RadioShack? Most will say Best Buy Co. Inc. (NYSE: BBY), while others will list other local technology retail chains in their town or city. So what about thinking of the store Walgreens after RadioShack?
RadioShack Corp. (NYSE: RSH) finally has hired a new replacement chief executive. Joseph C. Magnacca has been appointed CEO of the troubled RadioShack with an effective date of February 11, and he will also be on the company’s board of directors. The company called the 50-year old Magnacca an experienced retail executive and merchant, and he is currently the executive vice president and president of Daily Living Products and Solutions for Walgreen Co. (NYSE: WAG). Magnacca oversees all of Walgreen’s marketing and merchandising operations, covering more than 8,000 stores.
Magnacca has a challenge ahead of him. The good news is that he knows how to handle thousands of stores. RadioShack’s retail network includes approximately 4,700 company-operated stores in the United States and Mexico, as well as about 1,500 wireless phone centers in the United States and about 1,100 dealer and other outlets worldwide.
The bad news is that Daily Living Products and Solutions for Walgreen is not exactly a direct fit for a troubled electronics company. We will not bash the appointment for one simple reason. There are probably very few CEOs who would 1) be able to meaningfully turn RadioShack around and 2) want to take on the challenge. Here is what RadioShack said of Joe Magnacca:
He has also been responsible for the integration of the Duane Reade drugstore chain. He was president of Duane Reade at the time of its acquisition by Walgreen in 2010, and before that chief merchandising officer, undertaking the successful transformation of Duane Reade through the creation of an innovative urban operating model and customer experience. Mr. Magnacca’s previous senior management experience includes merchandising and marketing roles at two of Canada’s leading retail chains. He spent seven years as senior vice president at Shoppers Drug Mart, where he was instrumental in the company’s turnaround, and fifteen years at Loblaw, where he began his career. In 2010, Joe was named Merchant of the Year for Drugstore Retailing by Chain Drug Review magazine.
RadioShack said that the company expects Magnacca to be a be a catalyst for change. The company expects that he will refine RadioShack’s merchandising strategies and will reinvigorate the shopping experience for customers, and that he will be able to build sustainable value for RadioShack’s shareholders.
So, what we want to know is how RadioShack will really be changed. Magnacca has a drug store background. Bringing new merchandise strategies and reinvigorating a shopping experience are no easy task. Building shareholder value is also something that has been elusive for years and years at RadioShack. Go ask Julian Day how easy running that turnaround that couldn’t get turned around was.
We wish Magnacca all the luck in the world. RadioShack is one of those great iconic brands of yesteryear that has lost its place in the present and has a questionable future. This may sound ludicrous and facetious at the same time, and maybe that is the point. Will Magnacca open a pharmacy at RadioShack stores? Or will RadioShack start selling root beer floats and fountain drinks?
RadioShack shares were up as high as $3.35 earlier on the news, versus a $3.11 close on Thursday. The stock is currently up 3.5% at $3.21. That sounds good on the surface, but the trading volume of 2.3 million shares as of 11:30 a.m. compares to an average daily volume of 2.9 million shares. The 52-week trading range is $1.90 to $7.96, but RadioShack was far higher even when it tried shopping itself to private equity and retail buyers.
We would also note that RadioShack’s shares rose from less than $20 to over $30 under Julian Day before the recession took hold. Day was previously running Sears and Kmart, and he also had previously been a director at PETCO Animal Supplies. That turnaround just never materialized, and some feel it was a lack of experiencing in turning around a troubled retailer. The problem in just bashing any new CEO is that turning around a troubled electronic retailer is no easy task these days. Best Buy and a slew of other dead electronics retailers of yesteryear are all living proof.
Again, we wish Mr. Magnacca all the best of luck. We just do not see a great plug-and-play fit here.
Jon C. Ogg