RadioShack has officially filed for Chapter 11 bankruptcy, signaling the darkest chapter yet for one of America's most storied specialty electronics chains. As part of the filing, RadioShack says it will sell off up to 2,400 of its US stores. Most other underperforming locations will close for good, but RadioShack's brand will live on through a store-in-a-store agreement with Sprint and Standard General, who will be purchasing many of the retailer's current shops. Here's what Sprint says consumers can expect from the new hybrid RadioShack / Sprint stores:
Under the terms of the new agreement, Sprint would effectively operate a store within a RadioShack 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.
Right now, Sprint says it has over 1,100 company-owned retail stores, a figure that would double if this deal is approved by the bankruptcy court. Assuming that happens, Sprint will enter 1,750 of RadioShack's locations, extending the retail footprint of America's third-largest carrier significantly. Sprint says the approval process should be complete within a few months.
RadioShack's Chapter 11 filing reports assets of $1.2 billion and shows that the company had liabilities of $1.39 billion as of November 1st of last year. The ailing retailer was expected to close some 500 stores early in 2014, but shrinking revenues and underwhelming performance caused the company to bump this figure to 1,100 in a bid to save money. That plan was stymied, however, when RadioShack's lenders blocked the deal. That set the company on a course to destruction. Plans to revitalize brand image with concept stores, a new logo, and nostalgia-inducing Super Bowl ads failed to pay off, and the retailer's shares, lower than $1 for the early part of 2015, dipped to $0.24 when the company was suspended from the New York stock exchange earlier this week.
RadioShack has a workforce of approximately 27,500 people, according to SEC filings. The retailer has failed to post a profit since 2011.