RadioShack Files For Chapter 11 Bankruptcy For The Second Time
May 11, 2017
General Wireless Operations Inc., best known as wireless and electronic store chain RadioShack, filed for Chapter 11 bankruptcy for the second time on March 8, 2017. The Fort Worth, a Texas-based company first filed for protection in 2015, which led to the reorganization of business and the closing of nearly 2,400 of its stores, according to USA Today.
As of now, the company has plans to close roughly 200 more of its stores and reevaluate the options for its other 1,300 locations. Additionally, 360 of the stores RadioShack shares with Sprint – a business move they made after the first bankruptcy – will close. Overall, this will impact about 1,850 of the company’s employees.
In a statement, Dene Rogers, RadioShack’s president and chief executive officer said that the company has made progress since filing for bankruptcy in 2015, and that doesn’t go unnoticed.
“Since emerging from bankruptcy two years ago as a privately owned company, our team has made progress in stabilizing operations and achieving profitability in the retail business, while our partner Sprint managed the mobility business,” he said. “In 2016, we reduced operating expenses by 23%, while at the same time saw gross profit dollars increase 8%. Over the same time, we integrated FedEx pick-up/drop-off into 140 RadioShack locations, delivered to customers over 700,000 Hulu login pins and sold more than a million RadioShack private brand headphones and speakers delivering high quality, value- based audio products to consumers across the country.”
While RadioShack has seen improvement, they’ve witnessed downfalls as well. That’s why Rogers believes filing for Chapter 11 protection again is the best way to move forward.
“However, for a number of reasons, most notably the surprisingly poor performance of mobility sales, especially over recent months, we have concluded that the Chapter 11 process represents the best path forward for the Company,” he said. “We will continue to work with our advisors and stakeholders to preserve as many jobs as possible while maximizing value for our creditors.”
A downward spiral for electronics stores
RadioShack isn’t the only company feeling the whiplash of the digital age. Circuit City led the path in 2009 when it failed to find a buyer, according to Fortune. More recently, electronics and appliances retailer hhgregg filed for Chapter 11 bankruptcy on March 7, 2017.
What are the issues these physical retailers can’t seem to tackle? Keeping up with the ever-changing landscape in technology and matching the inventory that can be found online, according to The New York Times. For many consumers, the ability to sit back, relax and order electronics from the comfort of the couch sounds more appealing than driving to the mall and walking through a crowd of people to make a purchase. It’s as simple as that. Any retailer that wants to survive the change in shopping trends needs to take advantage of online sales and may want to consider developing an e-commerce business plan.