Radio Shack Files For Bankruptcy, But Survives Thanks To Sprint

By Christine Kern, contributing writer

Anticipated move creates partnership with Sprint to co-brand half of existing RadioShack stores

Radio Shack has entered into an agreement with General Wireless, an investment unit from Standard General, to sell 1,500-2,400 of the 4,000 U.S. Radio Shack company-owned stores.

But that does not mean the end for the electronics retailers.  Instead, Sprint has struck a deal with General Wireless to create 1,750 co-branded stores that would sell both Sprint products and services as well as those from Radio Shack, according to CNET. 

“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,” Sprint CEO Marcelo Claure said in a press release. “Sprint and RadioShack expect to benefit from operational efficiencies and by cross-marketing to each other’s customers.”

Under the terms of the new agreement, Sprint would effectively operate a store within a RadioShack store, occupying approximately one third of the retail space of each location. Sprint employees will sell mobile devices and plans on all Sprint brands including Boost and Virgin Mobile. The stores will be co-branded with Sprint being the primary brand on storefronts and in marketing materials.

According to CNN, Radio Shack stores in Mexico and Asia, as well as the franchise locations, are not affected by this deal.

The Chapter 11 bankruptcy papers were filed on February , CNBC reported. According to a Standard General statement, the branding on the surviving stores will feature Sprint, with the Radio Shack brand located inside the store.

The bankruptcy announcement is no surprise. The New York Stock Exchange suspended trading of its shares on Monday. And RadioShack (RSHC)workers have told CNNMoney that some locations have already been converted to clearance stores.

Last Spring, the company saw its stock prices plunge after announcing a plan to close about 1,100 underperforming stores, but it was only able to close 175 stores through the end of October. By year's end it was battling with its lenders to get the green light to close more. Losses have continued to grow, and in its latest quarter sales plunged  16 percent  from a year ago.