Shares of kiosk giant Outerwall are down more than 11.6% in pre-market trading after the company disclosed without explanation that J. Scott Di Valerio has resigned. Board member Nora Denzel will serve as interim CEO while the board searches for a long-term replacement.
Company chair Nelson Chan hints that Di Valerio was forced out, saying that the board “believes that now is the right time for a leadership change” because it would “accelerate the progress we are making.” He adds that the owner of the Redbox DVD rental kiosks “is well-positioned due to its strong operating and financial foundation.”
There’s no statement from Di Valerio. Outerwall says in an SEC filing that he stepped down on January 18 and resigned from the board yesterday. He took charge two years ago under equally surprising circumstances when Paul Davis — who had held the top job since 2009 — unexpectedly announced his retirement.
As part of this morning’s announcement, Outerwall said that it expects to announce relatively strong Q4 results with revenues of as much as $602 million, and earnings per share from continuing operations as high as $2.52.
Outerwall has had a rocky year. In October it pulled the plug on its Redbox Instant By Verizon streaming video joint venture with the telco giant. Later that month it said that a “a weak release schedule… and the unfavorable timing and mix of content released” in Q3 weighed on Redbox’s results. Sales at kiosks open at least a year fell 11.8% vs the period in 2013. The company, formerly called Coinstar, promised better times ahead due in part to belt-tightening and share repurchases.
But many analysts became concerned in November when it raised the price of an overnight DVD rental by 25% to $1.50. The near-term benefits. some feared, would be outweighed by the damage to consumers’ perception of Redbox as a bargain alternative to VOD and streaming services.