The RadioShack bankruptcy filing Thursday did not come as a surprise to investors, according to the Sprint press release. Reuters reports that the once-popular electronics giant had posted losses for 11 quarters in a row.
According to a RadioShack press release, the “store within a store” model will commence while pursuing asset sales and the complete restructuring of the company during the court-supervised bankruptcy process.
What might surprise some is that Sprint – the fourth in what’s known as the “Big Four” wireless providers – swooped in to save the day with a “co-branded retail experience,” as Sprint calls it. Alongside General Wireless Inc., which is part of RadioShack’s largest shareholder Standard General, Sprint will take the lead in the store name and retain up to a third of store space.
By snatching up between 1,500 and 2,400 RadioShack stores, Sprint and General Wireless Inc. will keep RadioShack from closing entirely. Future Sprint/RadioShack co-branded stores will sell Sprint and RadioShack electronics exclusively, with the intent of using the RadioShack electronics to pad the shelves.
RadioShack and Hilco, a liquidation firm, reached a deal that would mean closing RadioShack stores that are not performing well, according to Reuters. Additionally, DW Partners, a lending group, has agreed to loan $285 million so the company may operate during RadioShack’s bankruptcy proceedings, the report notes.
Joe Magnacca, RadioShack’s Chief Executive, said, “These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders.”
Among the expected Sprint branded lineup to come are items from Sprint’s full mobile portfolio, which will likely include what CNET calls some of the brand’s most popular cell phones of 2015. This will probably include such bestsellers as the Samsung Galaxy Note 4, Galaxy S5, LG G3, and the iPhone 6 Plus. Cell phones from other Sprint-owned brands, including Boost and Virgin Mobile, will also see shelf space.
The Sprint press release shows that when the RadioShack bankruptcy filings are complete, Sprint will take over about a third of the space in each of the remaining stores. However, RadioShack branded products will continue selling as well, but a little-known fact about General Wireless could mean T-Mobile and MetroPCS taking part of the stage too.
General Wireless Inc. not only has its own share of experience with filing for bankruptcy, but MetroPCS formed out of General Wireless Inc. in 2004, according to documents filed with the FCC. MetroPCS Communications was then formed during Initial Public Offering plans.
General Wireless’ company history shows it was created solely to bid on and use broadband PCS spectrum. The FCC declared the company winner of 14 broadband PCS licenses in 1996, but the “Commissions’ own mismanagement derailed the deal and caused the spectrum to devalue greatly, according to “Federal Telecommunications Law, Issue 2.” Those same documents show that General Wireless filed for bankruptcy in 1998 in an effort to hold onto the spectrum licenses.
Marcelo Claure, Sprint’s CEO, said in the company’s press release, “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.”
Claure added that both RadioShack and Sprint would benefit from “cross marketing to each other’s customers.”
RadioShack’s website added a public page on the restructuring process. Titled “We’re Open for Business,” it delineates the entire process while letting its loyal consumers know that RadioShack will continue to offer its products during the restructuring.
Given the propensity of wanting to expand sales, it is entirely possible that the RadioShack bankruptcy filing and cross deal with General Wireless Inc. could result in consumers seeing more T-Mobile and MetroPCS branded items on the shelves of RadioShack stores everywhere.
Could you picture Sprint, T-Mobile, and MetroPCS headlining in the same RadioShack stores?
[Sprint Logo via Sprint Media Library / RadioShack Photos via RadioShack Media Library]