Radioshack CEO Julian Day Is Getting it Done!

RadioShack (RSH) released results Tuesday and investors ought to be very pleased. (Click here for conference call.) "The Shack" posted a 20% increase in Q4 net income as the retailer's turnaround effort continues to take hold despite falling wireless-phone sales.

Mostly selling accessories, batteries and other gadgets for wireless products, RSH said net income rose to $101 million, or 77 cents a share, from $84.5 million, or 62 cents a share, a year earlier. Net Income was favorably impacted by improved gross margin, a reduction in SG&A, and reduced interest expense when compared to the prior year."Analysts" had expected 72 cents a share.

Revenue fell 6.4% to $1.36 billion, as same-store sales dropped 6.7% on lower wireless and satellite-radio sales. In October, RadioShack predicted a "challenging" fourth quarter because of both weakened demand and competition. If this is "challenging" I would love to see "optimistic".

CEO Julian Day, a former executive at Sears Holdings (SHLD) said:

I am delighted to announce that our team here at RadioShack once again produced strong improvement in our operating profit for the fourth quarter, and for the year as a whole. It is a testament to the hard work and devotion of everyone concerned, that this result was achieved against a background of difficult and uncertain economic conditions.

Its cash balance increased $38 million at the end of the fourth quarter of 2007 to $510 million, driven by improved working capital management and cash generated from net income. It was partially offset by $150 million repayment of bonds in September, 2007, and $209 million of share repurchases during 2007.

The best number was that the chain generated $300.9 million in free cash flow through the twelve months of 2007 versus free cash flow of $189.9 million for the same period in 2006. As we watch what bad management can do to a company at Circuit City (CC)), the results at RadioShack (up 16% Tuesday) show us what good management can do.

Disclosure: Long SHLD.

Comments

[R.S. BeenThere]

Sales could increase more IF the Shack had sales managers and district managers and regi9onal managers who were more focused on training the minimum wage clerks. Too many times in my stay with the Shack I have seen clerks being promoted soley on their ability to see wireless and NOT because they understood the financial and human nurturance side of management leadership to motivate. Instead I have seen the district managers and regional managers focus soley on sales figures so they can increase their bonus checks. In doing so, they ignore the very principles that the training program stresses for excellent customer service and sales techniques. It is so said to see the lowly clerk berated by uncaring and ignorant managers.

[still here]

could be the the fact that they screwed most of us out of bigger bonuses this year. IE: i was on track for 11000 and ended with 8000, 3000 may not be alot for some but when you are a single income family it makes alot of difference. do the math, they screwed 2500 managers at a average of 2000 a manager = 5 mil, wow wonder why profits were up

[the cook innsb]

Alot of these disgruntled employees are the victims of their own circumstances. The "been there" guy obviously did not embrace his own belief of training an associate is all aspects of the business. Radioshack does give the managers the tools to do their job and to train on profitability and selling the right mix of products.

To the "still here" guy, you probably missed your extra bonus $$$ by 1 cell phone sale per day. (alot of managers got ZERO) And by selling the phone and the features and the accessories you would have given yourself the $3000 you missed, not to mention increased profit for the company. Also, when selling the right mix you take better care of your customer and they'll come back for more and more.

To the rest who care to read on:

This is a good company to work for and I am back after having left only to find the grass is not greener on the other side. Its the easiest job you can have as a manager and approach high 5 figure incomes. Sure they made some cuts and restructured the pay plan. But how many companies go back after the year is over and says "oops, we estimated too high for some goals. We will retroactively reduce the qualifier for your bonus." Alot of managers got a bonus who wouldn't have before. RS spent an extra $4M to pay more managers more bonuses. (or higher in some cases)

The turnaround plan RS has in place is working and will continue to work unless we as employees lose faith and give up. Do your job, make your money, suck it up a little and you'll be fine. Especially when RS stock go back to the $30's. Its just a matter of time.

[Been ThereToo]

Being a former Business Products Shacker, I will say that RS is a great company to work for if you are a self driven individual, not looking for handouts.

That being said, the one thing that has continued to astound me is their lack/ability to take advantage of their massive geographical distribution system. Why they haven't been able to negotiate massive national rollouts of new/innovative products from manufacturers always amazes me.

One day they may realize that taking a lesser gross margin on such rollouts would generate so much additional traffic that sales of those high margin supplies/accessories/a... would once again put the chain on a sales growth and profitabilty path.

[goodriddance toRS]

"the cook" - i don't know when you were gone or when you returned, but as of the time that i left, it was NOT a good company to be working for. this is a company that was absolutely ripping off its employees and managers in '06, and it caused lots of us to realize there are other good companies out there that would like hard working and skilled people.
for the last few years that i was there, the company match for my 401k was a whopping 30%. yippie. they had a decent stock purchase plan and rewarded tenured employees and managers for years... and when they realized they needed to do something about their horrid profit-sharing, they boosted the company match to 100% for the 401k by getting rid of the stock purchase plan. the company giveth, and the company taketh away.
i interviewed just before the '06 vegas manager meeting, and quit just after. (thanks for the trip, radio shack, i will give you credit for a fun time) the company i've been at for the past year and a half guarantees a 200% match for profit-sharing, and has hit 297% matching or greater for 4 years.
i will say this...i do want to see radio shack's stock back in the 30s or higher. you see, that profit-sharing, employee stock plan and managerial stock options that i accumulated over the years aren't doing much good with the price in the teens. i was there long enough to remember a stock price of 78 dollars (1999) and currently radio shack's stock is hindering my retirement portfolio even as my mutual funds climb.
step up your game, radio shack. the other fortune 500 companies are, by and large, leaving you in the dust.

[Beenthere,Donethat]

The "Cook" has been well indoctrinated by RS. He has fallen hook, line, and sinker for the company line. Cell phones have never been profitable for the stores, they are basically loss leaders. Unfortunately once lead to the store, customers are not introduced to the high profit item that RS was built on. RS ignores their core business and is constantly reducing the availability of the merchandise for which people go to RS. Bulbs, resistors, cables, and etc. may not be glamorous, but they built RS, and they are still the main reason people frequent the store. Very few of the managers and clerks know or understand this, they only want to sell a phone for the "spiff". RS penalized manager running high profit stores by requiring sales of no profit cell phones to get a bonus, the total of which was less than previous bonuses for high profit sales. All of the "profit" from cell phone sales is in the residual, which is shared by the parent company and RS corporate officers. RS looses their participation in the residual after a few years because they cannot offer the renewal that the parent company does. It is a short term game for RS and they are now to see the results of selling they soul to the wireless companies. Get back to hard goods and real profits, take care of your core customers, and be the RADIO SHACK that is needed in every community in America. Stop trying to compete with major electronics companies by selling overpriced and inferior knock-offs of what was popular last year. Get back to selling quality products, at reasonable prices, and provide support after the sale. Hey guys, that is retail, not "ya wanna buy a cell phone" so I can get my "spiff", and send you on your way.

[wtf?]

Julian, you're 'the cook in nsb'? (or did you mean the 'kook'?) either way.. Day is the anti-christ, and the only thing more disgusting than him are you mindless
[Comment edited for abusive language. Commenter put on watch.] that believe this crap.
go get a paper route and earn some honest money... and while delivering the paper, could you stop and ask where i might find a Sears or a K-Mart on the way? all part of the Turn-around (and bend over) Plan!

[KayDee]

RS is systematically shedding senior store sales managers, those with years of tenure, experience, AND who have been tops in sales. Their reason? $$$$$$$$$$$$$$$$$$$$$$... They'd rather hire kids with NO WORK ETHIC and NO KNOWLEDGE, pay them crap, than have people around who actually KNOW what they're talking about and deliver GOOD CUSTOMER SERVICE.

Little wonder that the stock has tanked.

[User 245038]

I'm encountering a missunderstanding problem with Radioshack. I'm an outstanding customer since 2005, Since the last 3 years I haven't missed any monthly payment. My adress and phone still the same. My Situation is the following. I'm a disable person and for the last months I did not received my Bill Statements. It never cross in my mind that I miss paying radioshack bill. Not until I received a phone call from the Collection Dept. to inform me that I needed to settle the account with them. What I don't understand is why Radioshack as courtesy could if, had call me inmediately they missed the first payment. I would have gone to the store and make my payment. I have never refuse to pay my bill and I still don't refuse. All I want is to pay my monthly payment as usual. Since I'm a disable person with a fixed income is not fair that this account should be in the hands of this collection party. Please Help me you are the CEO. This is my e-mail adress [e-mail]
Maria