RadioShack, a household name in electronics and appliances since 1963, has announced that it is filing for bankruptcy. The electronics chain follows a number of U.S. retailers like JC Penney, struggling to stay afloat in an economy hit by lower consumer spending.
After failing to close the widening gap between its products and those of the digital era, RadioShack announced it will file for Chapter 11 on Thursday.
Standard General, which gobbled up 1,750 of Radioshack's 4000 stores will be partnering with wireless carrier Sprint to create “store within a store” model for these stores. RadioShack will shutter down the remaining stores. An agreement inked by hedge fund Standard General is slated to buy up to 2,400 of RadioShack’s stores.
RadioShack said that it will shut down the remaining stores. However, its franchises in Mexico and Asia are not part of the Chapter 11 bankruptcy filing, according to the Wall Street Journal.
“These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders,” Joe Magnacca, RadioShack’s chief executive officer, said in a statement.
RadioShack employees had been suspecting a closing down of its stores after the retailer failed to turn in profits since 2011.
When it tried to close down 1,100 stores in 2014, creditors blocked the deal. At that time, shares of RadioShack traded for pennies before New York Stock Exchange de-listed it.
While RadioShack made an honest attempt to turn things around, nothing seemed to work. The mobile phone was on its way to becoming a must have tool for everyone since 2000. Then there was the smartphone following suit to becoming ubiquitous. Though RadioShack carried these devices in its repertoire, the market for the latest mobiles and tablets became saturated.
"RadioShack’s revenues grew to US$6.3 billion in 1996, a level that it hasn’t come close to since. But selling lots of stuff isn’t everything. The same year that RadioShack’s sales peaked, it was unprofitable for the first time in recent memory. The company realized it had to pull the plug," Financial Post shared.
