RadioShack, the consumer electronics retail business that started out 94 years ago, on Thursday officially filed for Chapter 11 bankruptcy.
Unable to keep up with the pace of change in a fast-moving market, and with revenue continuing to fall, news of the bankruptcy will surprise few. However, it looks like RadioShack will live on, though in a diminished form.
Hedge fund Standard General will acquire up to 2,400 of RadioShack’s 4,000 U.S. stores, while a deal with Sprint will see the telecom giant move into around 1,750 locations.
The agreement includes a store-within-a-store concept that involves Sprint taking over around a third of retail space at the RadioShack stores to sell mobile devices and wireless plans.
It’s understood that Sprint will be the main brand on storefronts, while the RadioShack brand will still be visible within the stores.
Sprint CEO Marcelo Claure said in a statement: “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.”
He added, “Sprint and RadioShack expect to benefit from operational efficiencies and by cross-marketing to each other’s customers.”
The telecom firm currently has around 1,00 company-owned retail outlets, so the deal looks set to more than double its presence. The agreement is likely to be signed and sealed in the next few months, though it’s still possible for other groups to put in bids for the locations during the bankruptcy process.
Thursday’s news follows reports earlier this week that suggested Sprint would have some involvement with RadioShack. The same reports also said Amazon was in discussions to take over some of RadioShack’s stores, possibly to sell its hardware and also act as a collection and drop-off point for Amazon goods, but up to now there’s been no word on any deal regarding the online retailer.
Once the go-to store for tinkerers and hobbyists, RadioShack’s decline has been a long one. In 2006, the company closed around 500 stores in a restructuring exercise that also saw hundreds of positions go at its Fort Worth headquarters.
In a further move to boost its business, the company last year tried to close more than 1,000 of its stores, but an issue with lenders meant it could only close 200 outlets at the most in a single year.
The writing was on the wall earlier this week when the New York Stock Exchange announced it was moving to delist the company’s stock and suspend trading in its shares.