RadioShack files for bankruptcy as Sprint agrees to share stores
Sprint will work with the investor behind RadioShack to re-create the stores under the two brands.
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RadioShack filed for Chapter 11 bankruptcy protection on Thursday, although Sprint has swooped in to ensure there will still be life for the electronics chain.
The long-struggling retailer said it had entered into a deal with General Wireless, a unit of investing firm Standard General, to sell between 1,500 and 2,400 stores in the US. RadioShack operates 4,000 company-owned stores in the country.
Sprint said it had struck a deal with General Wireless to create 1,750 jointly branded stores that would sell a combination of Sprint products and services and RadioShack products and accessories.
The bankruptcy filing marks the end of a publicly owned and independent RadioShack, which has been operating for nearly a century. The company sold a range of electronic products including remote-control cars, cell phones and batteries -- many of them under its own brand. For a time, the RadioShack brand allowed the company to charge a premium on gadgets, since there were few alternative options available to consumers. It is just the latest victim of the broader shift toward online shopping, something even big-box retailers such as Circuit City and CompUSA couldn't survive.
The company attempted to transform itself several times, once rebranding itself "The Shack" and devoting itself more toward mobile products and then drones. But it couldn't compete against competitors such as Best Buy or online retail giant Amazon.
Sprint, however, breathes new life into a fraction of the stores. The deal gives the nation's third-largest wireless carrier additional distribution. Sprint operates 1,100 company-owned stores in the US, fewer than even T-Mobile, the No. 4 wireless carrier.
"Sprint's deal is a smart way to dramatically increase its footprint of company-owned retail locations," said Jan Dawson, an analyst for Jackdaw Research. "This deal is a cost-effective, rapid way for Sprint to make some rapid progress."
"Our goal is to grow distribution," Sprint CEO Marcelo Claure said in an investor conference call earlier Thursday. "We're looking at different opportunities."
Sprint said that it would operate a "store within a RadioShack store," allowing it to have a retail location where it has the exclusive rights to push its own service, as well as its prepaid options Boost Mobile and Virgin Mobile. The stores will carry both brands with Sprint being the primary brand on storefronts and in marketing material. RadioShack previously pitched phones and services from several different carriers.
The bankruptcy proceeding means that the rest of the stores will likely close, although the company said it is in talks to sell the rest of its assets. Amazon was reportedly also interested in scooping up some of the stores.
RadioShack has 1,000 dealer stores in 25 countries, stores operated by a Mexican subsidiary and Asia operations which are not affected by the Chapter 11 filing.
