RadioShack has filed for Chapter 11 bankruptcy, marking the second time in more than two years that the beleaguered consumer electronics brand has taken the drastic step to reconsider its future. General Wireless Operations Inc., operator of the RadioShack brand, filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware.
The retailer is closing approximately 200 stores and said it isevaluating options on the remaining 1,300 locations. Mobility partner Sprint has reached an agreement with General Wireless Operations to convert “several hundred doors” into Sprint corporate-owned stores, according to a blog written by Kevin Krull, Sprint’s President of Omnichannel Sales.
RadioShack and its advisors are currently exploringadditional available strategic alternatives to maximize value for creditors, including the possibility of keeping stores open on an ongoing basis.
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RadioShack initially filed for bankruptcy in February 2015, and had to shut down more than half of its 4,000 stores before emerging. To keep the brand alive, the retailer sold the remaining 1,700 stores to lender Standard General LP, the parent company of General Wireless Operations.
Sprint opened mini-stores inside more than 1,000 existing RadioShack locations when the retailer first emerged from bankruptcy protection. Under the collaboration, RadioShack intended to evolve its brand from an electronics-focused offering to a more wireless-oriented retailer. But with very little differentiation from products available via Amazon, Walmart or Best Buy, the retailer still couldn’t bring in sales and foot traffic required to execute a successful turnaround.
RadioShack CEO Dene Rogers said the brand had “made progress in stabilizing operations and achieving profitability in the retail business” since emerging from bankruptcy two years ago as a privately-owned company.
“In 2016, we reduced operating expenses by 23%, while at the same time saw gross profit dollars increase 8%,” Rogers said in a statement.“However, for a number of reasons, most notably the surprisingly poor performance of mobility sales, especially over recent months, we have concluded that the Chapter 11 process represents the best path forward for the company. We will continue to work with our advisors and stakeholders to preserve as many jobs as possible while maximizing value for our creditors.”
