At RadioShack, the stores themselves have become as big a concern as the cratering bottom line. Well almost.
With the hiring last week of Walgreen Co.’s expert merchant and marketer Joe Magnacca as the electronics retailer’s CEO last week, the RadioShack board of directors has telegraphed that the company will focus on merchandizing and marketing to pull the troubled chain out of the doldrums.
In Magnacca, they also got a leader known for a winning personality, a focus on the customer experience and a man with a reputation for innovative approaches and store design.
They also got a diehard hockey fan, a man with a soul patch goatee who made a deal last year for co-branding while working with contestants on Celebrity Apprentice. He also sports photos of himself with celebrities, including Halle Berry, Kurt Russell, Fergie of the Black-Eyed Peas, and Taylor Swift on his Facebook page. “He’s what I would call an engaged, inspiring leader,” said Dan Feehan, president and CEO of Cash America and chairman of the RadioShack board of directors. If all of that is evidence that Magnacca possesses a youthful energy and marketer’s enthusiasm, it is a list of virtues that will likely come in handy. Magnacca, who started in his new position Feb. 11, said he would not do any interviews until after the retailer releases its earnings later this month. The chain’s stock, listed as RSH on the New York Stock Exchange, was trading above $23 in March of 2010. It was hovering around $3.36 last week. RadioShack has 4,476 retail stores in the United States, 1,091 dealer centers, three major distribution centers and about 34,000 employees. It also has 227 stores and other operations in Mexico. The company just ended a lopsided partnership with Target where it operated 1,496 Target Mobile stores within Target stores. That deal cost RadioShack more than $35 million, according to estimates, before it terminated the agreement earlier this year. The company is expected to announce losses of more than $70 million for the year in an earnings report set for Tuesday, Feb. 26, according to an analyst consensus compiled by Bloomberg News. RadioShack’s woes have been blamed on a lower allocation of iPhones than expected, more competition for mobile devices and a decrease in the wave of smartphone sales, overall. Bigger than those problems, the company has been stumbling to find a store identity for a decade, bouncing between trendy products that have kept it afloat in the interim. In a financial research report issued in the fall, Dan Wewer at Raymond James & Associates kept the company on a rating of underperform for the reasons listed above. “We believe these results highlight the declining relevance of the company’s business in the face of a highly competitive environment and a weak [consumer electronics] product cycle,” Wewer wrote. Magnacca, 50, and a native of Toronto, Canada, began his career and served 15 years at Loblaw’s, a Canadian grocery chain, as vice president and chief marketing officer. He then spent seven years as senior vice president at Shoppers Drug Mart, where he is credited with helping execute a company turnaround. He joined Duane Reade in 2008 as vice president and chief merchandising officer. He was named president and charged with integrating the company into the Walgreen’s chain when it bought Duane Reade in 2010. On Feb. 1, Magnacca was promoted to executive vice president. “We want that customer experience to be unmatched in the industry, and Joe is helping to bring it to life through leading edge store design, enhanced products and services, and increased customer delight,” Walgreen CEO Jeff Wasson said in a press announcement of the promotion. “His exceptional strategic market focus means we are now better positioned than ever to meet the daily living needs of our customers.” Less than a week later, RadioShack announced his appointment to the top job at the struggling electronics retailer. Magnacca appeared on Donald Trump’s Celebrity Apprentice television show in early 2012. There he met Dean DeBiase, the CEO of Entertainment.com. Shortly thereafter, Entertainment.com introduced a new promotion, exclusively through Walgreen’s, for online coupons and other discounts. “It is that kind of operating intuitiveness that separates innovative leaders from followers in business today,” DeBiase said of Magnacca’s quick grip on the opportunity. Trump promoted the Walk with Walgreen’s program as part of a cross promotion. Magnacca started at RadioShack Feb. 11 with a $1 million salary and $1 million signing bonus, plus stock options and a possible performance bonus, according to a filing with the Securities and Exchange Commission. “I see advantages in being a small box retailer in the consumer electronics space today, particularly with the broad retail footprint and convenience RadioShack offers its customers,” Magnacca said in a prepared statement accompanying the announcement. “I believe my experiences will help the team identify and execute on new opportunities that can return this great company to a position of prominence in the lexicon of American retailers.” But it won’t be immediate, Feehan warns. “It’s going to take some time for him to get his head fully around the business,” Feehan said, expressing confidence that Magnacca is going to perform what a string of predecessors have not. “He’ll be a hero when he does it,” Feehan said.