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Wednesday, January 20, 2021

RadioShack files for bankruptcy

General Wireless Operations, the RadioShack successor created by a partnership between Sprint Corp. and the defunct retailer’s owners, on Wednesday filed Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware.

RadioShack.com, stores and dealer locations across the country are still currently open for business and serving customers. The company is closing approximately 200 stores and evaluating options on the remaining 1,300, according to a company news release. The company and its advisors are “currently exploring all available strategic alternatives to maximize value for creditors, including the possibility of keeping stores open on an ongoing basis,” according to a company statement.

“For nearly 100 years, RadioShack has proudly served local communities across the United States, offering consumers unique, high-quality products at a great value,” said Dene Rogers, RadioShack’s president and CEO. “Over the course of the past two years, our talented, dedicated team has worked relentlessly in an effort to revitalize the company and the RadioShack brand, while providing outstanding service to our customers. We greatly appreciate their hard work and dedication.”

The company, which does business as RadioShack, operates outlets that share space with Sprint’s retail locations, as well as franchising the name to other stores.

The bankruptcy is another blow to the RadioShack brand, an almost-century-old source of electronics based in Fort Worth that struggled to compete with online merchants and big-box retailers. The General Wireless venture was designed to help the RadioShack name live on following the demise of the original chain. But pressures on the business, including sluggish foot traffic at shopping centers and a shift to e-commerce, have persisted.

Fort Worth-based RadioShack Corp. filed for bankruptcy in 2015. The company closed about half of its 4,000 stores and sold 1,700 to creditor Standard General LP, which teamed up with Sprint to form General Wireless. The deal created 1,400 co-branded locations with Sprint, plus several hundred franchised units.

Sprint is the fourth-largest U.S. wireless carrier and Standard General is an investment firm that previously backed American Apparel.

When the venture was rolled out in 2015, CEO Ron Garriques said he had “ambitious plans for the new RadioShack.” The business renovated locations and updated inventory. The Sprint partnership also was meant to give the stores an edge.

At the time, the business lined up a financing package that included a $50 million asset-backed credit line, led by RBC Capital Markets, as well as a $25 million term loan from Great American Capital Partners.

But the company has been working against a broader pullback in brick-and-mortar retail. Best Buy Co., the largest electronics chain, delivered a disappointing outlook this week, a sign that even the biggest retailers are struggling to adapt.

“Since emerging from bankruptcy two years ago as a privately owned company, our team has made progress in stabilizing operations and achieving profitability in the retail business, while our partner Sprint managed the mobility business,” Rogers continued in a statement. “In 2016, we reduced operating expenses by 23 percent, while at the same time saw gross profit dollars increase 8%. Over the same time, we integrated FedEx pickup / drop-off into 140 RadioShack locations, delivered to customers over 700,000 Hulu login pins and sold more than a million RadioShack private brand headphones and speakers delivering high quality, value-based audio products to consumers across the country. 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.”

Additional information is available at www.radioshack.com. Court filings and claims information are available at a separate web site maintained by the company’s claims agent, Prime Clerk, www.primeclerk.com.

Pepper Hamilton LLP and Jones Day are serving as legal advisors to General Wireless.

Last May, Rogers, former CEO of Target Australia and Sears Canada, became president and CEO of RadioShack. – FWBP Staff and Bloomberg contributed to this report.

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