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Hints Things Aren't Going Well?

July 09, 2012 | About:

Barel Karsan

Until a company reports its latest financials, investors are usually anxious to know whether business has been strong or weak in the months since the last report. Sometimes, however, there are hints investors may be able to use to answer this question. RadioShack investors may have received such a hint last week.

The company abruptly announced that its Chief Merchandising Officer Scott Young has resigned. No line about how Young simply wishes to spend more time with his family was spewed and no "sincere thanks" was offered for the employee's "lengthy and valued service". Though Young didn't even make it to two years, his tenure must have felt much longer than that considering RadioShack's floundering stock price.

As usual, as investors we are left guessing as to why he's leaving. Was he not getting the job done in helping RadioShack get back to profitability? Does he not have confidence in the current leadership and is therefore jumping ship before it sinks? None of these situations bode well for current investors.

Of course, at the same time it's possible this departure has nothing to do with business. Perhaps this is the one executive who *does* want to spend more time with his family, or perhaps he pulled a Hurd or Dunn and had to be let go for lack of professionalism. We just don't know.

But as the company's second quarter now draws to a close, investors will be as anxious as ever to find out if the company's monthly sequential improvement in Q1 continued into Q2. The stock has been hit hard in the quarter, bringing shares of RSH to almost net-net levels! This resignation only adds to the fear.

Disclosure: Author has a long position in shares of RSH

About the author:

Barel Karsan
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