Radioshack CEO Julian Day Is Getting it Done! 14 comments
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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.
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This article has 14 comments:
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.
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.
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.
[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!
Little wonder that the stock has tanked.
Maria