Radio Shack May Be Filing For Bankruptcy

Multiple sources have informed The Wall Street Journal that 94-year-old electronics chain RadioShack will likely file for bankruptcy protection by the first week in February. The company, which is based out of Fort Worth, Texas, is supposedly now conversing with a private-equity firm that may purchase its assets out of bankruptcy. RadioShack has also reached out to potential lenders for keeping the company afloat while it goes through the bankruptcy process.

The move to file for bankruptcy shouldn’t be a surprise, as RadioShack warned in September that it would be forced to make the move if it couldn’t raise the funds it needed to stay out of the red. According to the WSJ, RadioShack has posted losses over the last eleven quarters, and its stock-market value has plunged as well, dropping to less than $50 million.

In the company’s securities filing back in December, RadioShack indicated that thanks to three years of losses, it was now sitting on a thin blanket of money as of November 1st: $19.3 million that it could borrow and $43.3 million in cash. That’s not much, considering that RadioShack has around 5,200 stores located throughout North America.

Back in March, RadioShack tried to close a number of its stores to save money, but the move was blocked by its lenders, including Salus Capital Partners. Why? Because the loan agreement between the lenders and RadioShack said that the company could not shut down more than 200 stores. RadioShack wanted to close the doors of around 1,100 low-performing locations nationwide.

The paper reported that RadioShack’s financial woes actually started back in the 1990s when the company began to heavily push smartphone sales rather than its portfolio of electronics. By 2011, the company’s phone business accounted for half of its revenue. Unfortunately, earnings were mediocre because customers shopped elsewhere for phone accessories.

Another problem RadioShack faced was the Internet. Although the company sells its products online, customers can load up Amazon to find similar products at a cheaper price.

RadioShack tried to re-brand itself as “The Shack” back in 2011. While the campaign managed to increase the sales of its smartphone lineup, it failed to get customers interested in the branded electronics. The company also tried to entice customers with a 2014 Super Bowl commercial that starred popular 80s actors/characters such as Twisted Sister front man Dee Snider, Hulk Hogan, Jason Voorhees (Friday the 13th) and a few others. That spot did not help increase sales either.

The report states that horrible holiday sales in November and December likely pushed RadioShack into filing for bankruptcy.

Do you shop at RadioShack, or do you get cables and electronics through other online stores like Amazon? Has RadioShack become irrelevant in the smartphone/tablet era?

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  • CaedenV
    What the hell kind of bank would not be willing to modify their agreement in order to help make a company solvent? Now Radio Shack goes bankrupt and the bank is only going to get a little of their money back. *sigh*

    At any rate, Radio Shack has gotten exactly what they deserved. A year or two ago they ran a commercial about "The 80's called, and they want their store back" and that is absolutely correct! Radio Shack was a great place that you could go and pick up any cable, adapter or part that you needed right away. Their price was higher than shops like Parts Express, but it was still a reasonable price and you did not have to buy parts in bulk. But now it is all crap RC cars and rip-off phones and contracts.
    They still have some component parts, but good luck finding anyone with any amount of intelligence that could help you! I remember a few years back needing to get an RCA to BNC adapter and the person at the desk refused to sell it to me because (and this is a direct quote) "RCA is for analogue signals and BNC is digital"! OMG! How stupid can an employee be?!?!?! I tried to (somewhat politely) explain that I knew what I was doing and that they would not make such a part unless someone needed to buy it. After spending 10 minutes TRYING to buy something from them I threw it behind the counter and ordered an adapter online paying for overnight shipping. It cost an arm and a leg, but it was still better than dealing with the Radio Shanty. So long, and good riddance!
  • B16CXHatch
    I was just discussing this with my dad. They just aren't relevant. Most of the things I can think to get there, IF they even have it, is always more expensive. The one here in town where I live has just moved and ever since it moved, its selection of ANYTHING has been pathetic. Their selection wasn't great at their old location either. When I was at university, there were 2 in the city there, and they were halfway decent but still total ghost towns.

    The last time I bought anything was when I was still there working at an auto parts store while still at university and a fuse blew in our memory saver for changing batteries in cars. Weirdly we didn't carry the one it needed so I picked one up there. That kind of stuff was about all they were good for to me cause anything else like cables, home theater stuff, tablets, etc. you could get cheaper elsewhere and have a considerably better selection to boot.
  • mortsmi7
    RadioShack should really go back to being a parts store. They could sell computer parts along with audio and other electronic tidbits. I might go there if I needed something today. Taking a role somewhere between Mouser Electronics and Newegg, they might attract more serious customers and raise their reputation. And having a robust online catalog couldn't hurt either.