After nearly 10 years of CEOs who were either shysters or morons, and a board of directors who may not have known what the company sold, the inevitable has happened: RadioShack has filed chapter 11 bankruptcy. This comes mere hours after the New York Stock Exchange delisted the company's stock because of corporate value.
While announcing the filing, the company also announced part of their plan to deal with bankruptcy. Currently operating over 4,000 stores, the company will sell between 1,500 and 2,400 of the stores to General Wireless. General Wireless is a new company, formed between Standard General and Sprint, who will create a "new" store within a store concept.
This new concept will move in to 1,750 of these acquired stores. The store will sell exclusively Sprint-owned wireless services (including Virgin Mobile and Boost Mobile) in one-third of the store, paired with mobile-supporting RadioShack-branded products in the rest of the store. Sprint CEO Marcelo Claure said,
We've proven that our products and new offers drive traffic to stores, and this agreement would allow Sprint to grow branded distribution quickly and cost-effectively in prime locations. Sprint and RadioShack expect to benefit from operational efficiencies and by cross-marketing to each other's customers.
Interestingly, this is not the "new" concept that Sprint or RadioShack would have you believe. In fact, Sprint once operated a smaller concept of the same store within a store within RadioShack for many years. The difference here is that Sprint employees will be tasked with selling Sprint services, as opposed to RadioShack employees. Also, these stores will be co-branded, with Sprint being the primary brand, as opposed to RadioShack.
In addition to the sale of some stores, the company also plans to close another 1,784 of their stores in 3 rounds. Those stores have been detailed: many being expected, some a bit surprising. In our local market, a brand new store (less than 6 months old) will be closed and not transferred to Sprint. It would appear that the intent is to close its mall stores, leaving mostly neighborhood stores behind. The stores that will be going away are planned to close by the end of March, giving them very little time to accomplish the goal.
If these closures go as previous RadioShack closures, a liquidation company like Hilco, who also handled Circuit City and Kmart/Sears Essentials closures, will be brought in to accomplish the goal. This means that if you are looking for deals on tech products, checking out whether your local store will be closing or not might be a great idea.
Disclaimer: The author is a former RadioShack employee with 10 years with the company in a variety of roles.