Sprint retail partner RadioShack files for bankruptcy for second time in 2 years

Sprint retail partner RadioShack has filed for bankruptcy for the second time in just over two years.

The companies had teamed up in 2015 after the troubled electronics retailer was emerging from a bankruptcy reorganization. Sprint and RadioShack signs shared the front of stores as the Overland Park-based wireless carrier hoped the quick and low-cost expansion of its retail footprint would help attract subscribers.

It proved less successful than at least RadioShack had hoped, and it is closing about 200 stores and evaluating options on the remaining 1,300.

Sprint said it will retain some of the stores for itself.

“The bottom line is that RadioShack’s Chapter 11 filing is not material to Sprint’s business and we have an agreement in place to convert several hundred RadioShack stores to Sprint company-owned retail stores,” a Sprint spokeswoman said in an email.

Kevin Crull, Sprint’s president of omnichannel sales, said in an online statement that the original partnership with RadioShack’s operator, General Wireless Operations, included terms to protect Sprint even in the event of a second bankruptcy by RadioShack.

“We evaluated the performance and location of Sprint-RadioShack stores and reached an agreement with General Wireless Operations to convert several hundred doors into Sprint corporate-owned stores. We will redeploy to other Sprint stores assets such as signage, displays and inventory currently at RadioShack locations which are closing,” Crull’s statement said.

Crull also said Sprint “will provide opportunities for all Sprint employees working at Sprint-RadioShack locations to transition to another Sprint store.” The stores have about 2,000 Sprint employees.

RadioShack’s bankruptcy filing listed Sprint Prepaid as its largest creditor with an unsecured claim but did not indicate the dollar amount. It lists instead that the claim is “unliquidated,” which means the exact amount is unknown.

The second largest claim, exceeding $5.57 million, belongs to Brightstar US Inc. It was part of Miami-based Brightstar Corp. that was founded and run by Sprint CEO Marcelo Claure before he sold it to Tokyo-based SoftBank Group Inc. to become head of Sprint. SoftBank owns more than 80 percent of Sprint.

RadioShack’s 2015 bankruptcy filing had shown that the company had owed Sprint more than $6 million.

Ahead of RadioShack’s bankruptcy filing, some area Sprint-RadioShack stores posted signs saying “Entire store on sale,” “Everything 30 % to 60 % off,” and “All Sales Final.” The company has a dozen locations in the metro, as well as locations in Lawrence and St. Joseph, and each is a Sprint store as well, according to RadioShack’s website.

Jeff Moore of Wave7 Research said it made sense for Sprint seek control of stores that have been productive for the wireless carrier.

“Sprint is known to be pretty hungry for distribution,” Moore said. "Sprint had put a lot of effort into this."

The original partnership covered about 1,400 stores, Moore said, but had been cut back to 1,200.

He said some stores struggled to produce sales and had gained a reputation as a store where customers didn't have to stand in line.

Sprint even experimented with staffing the stores, turning for several months last year to store clerks provided by The Revenue Optimization Companies, often called T-ROC.

A year ago, Sprint announced a partnership with European retailer Dixons Carphone to open 500 Sprint-branded stores in the United States. At the time, Sprint had said it operated 1,100 of its own stores and worked with 2,000 dealer-owned locations.

The setback to Sprint’s retail footprint comes as rival T-Mobile US says it plans to open 2,500 stores this year, on top of 1,400 last year. The 2,500 include 1,000 stores for its prepaid Metro PCS brand.

RadioShack, based in Fort Worth, Texas, filed its petition in bankruptcy court in Delaware on Wednesday.

In a statement, RadioShack President and Chief Executive Officer Dene Rogers said since the company’s bankruptcy filing in 2015, the retailer had made progress in stabilizing operations, including reducing operating expenses by 23 percent.

But Rogers said several reasons, including a partnership with wireless carrier Sprint that proved not to be as profitable as expected, prompted the latest bankruptcy filing.

General Wireless, part of hedge fund Standard General, acquired the RadioShack trademark and many of its stores after its 2015 bankruptcy.

RadioShack was founded in 1921. Long known as the place to find batteries and obscure electronic parts, in recent years the company tried to remake itself as a specialist in wireless devices and accessories.

That strategy largely was stymied by the advent of smartphones.

RadioShack has tried to update its image but faces formidable competition from online and discount retailers.

The Associated Press contributed to this report.

This story was originally published March 9, 2017 at 9:00 AM with the headline "Sprint retail partner RadioShack files for bankruptcy for second time in 2 years."