As has been rumored over the past month, American electronics retailer RadioShack has officially filed for Chapter 11 bankruptcy protection, with the aim of reorganizing operations under Sprint that will see the wireless carrier take over selected locations in a bid to expand its own retail footprint in a joint agreement with Radio Shack’s largest creditor and lender in Standard General.
The preliminary agreement calls for Sprint to take over up to 1,750 current Radio Shack locations under a new operating arrangement that will see Sprint branding being added to those locations. Sprint will effectively operate a store within a Radio Shack store, occupying approximately one third of the retail space of each location. Sprint employees will sell mobile devices and plans on all Sprint brands including Boost and Virgin Mobile. The stores will be co-branded with Sprint being the primary brand on storefronts and in marketing materials.
The bankruptcy filing follows 11 straight quarters of losses for the chain after a previous attempt to close 1,100 stores fell through last year; lenders rejected Radio Shack’s initial plan for its restructuring that included the store closures, which featured a push into transforming its identity as a mobile phone and consumer electronics first store, with a Super Bowl ad touting its in-store remodeling initiative that failed to drive customers to its locations. Radio Shack did close 400 underperforming locations during the last year and reduce its store count to 4,000, but also suffered extensive image problems due to the visible struggles with its lenders regarding the store closures.
Radio Shack’s dealer franchise stores, Mexican subsidiary and Asian operations are not part of the bankruptcy and are not expected to be affected by the attempted restructuring. Radio Shack will also sell up to 2,400 of its stores to Standard General, at which time they will be liquidated and shuttered, if no additional buyers can be found for 2,100 currently underperforming locations, meaning that Radio Shack would no longer exist as its own company after nearly 100 years in business. Radio Shack has already opened a page on its portal regarding the restructuring as well, with more details in the coming weeks and months.