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?

Follow Kevin Parrish @exfileme. Follow us @tomshardware, on Facebook and on Google+.

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  • das_stig
    Oh No ! What will Sheldon Cooper do now ???
  • reactive
    "Do you shop at RadioShack, or do you get cables and electronics through other online stores like Amazon?" I'm in the UK, and we have a chain of terrible stores very much like RadioShack, called Maplin. I needed a 10m Ethernet cable recently so dashed into a Maplin I was passing, and they only had no-name Cat6 cable, for which they wanted to charge me £18 - yes EIGHTEEN pounds! On Amazon a Belkin branded 10m CAT6 cable costs £5. That's why these idiots deserve to go out of business.