For unsustainable businesses finding its way in an ever-changing marketplace, one bankruptcy may not enough. Sometimes, it takes a second filing to determine if they can truly sustain in the future.
RadioShack is the latest example. Facing a challenging retail environment and an unsatisfying partnership with Sprint, the electronics retailer has returned to a U.S. bankruptcy court on March 8 to file its second Chapter 11 reorganization in two years.
The Forth Worth-based company’s first filing occurred in 2015, leading to 2,400 store closings, after the company was caught off-guard by the rise in mobile phones. Due to customers choosing big box competitors, RadioShack was losing $200 million annually in that business alone. General Wireless, a joint venture of hedge fund Standard General and Sprint, subsequently acquired it and has been running 1,518 stores.
In the petition, RadioShack announced that it would close 187 more stores by March 13, approximately nine percent of their current locations. In addition, the 360 stores shared with Sprint will be shut down with the remaining 971 to be evaluated. Co-branded as “Sprint Team at RadioShack” stores, the partnership failed to turn their fortunes around as Sprint sales also dropped.
The current Chapter 11 bankruptcy will affect 1,850 of RadioShack’s 5,900 employees.
Established in 1921 selling walkie-talkies and ham radios, the company gained fame for more than becoming a neighborhood destination for selling batteries, loudspeakers and satellite TVs. It gained particular notoriety by selling the TRS-80, the first mass-marketed, fully assembled personal computer with an operating system written by a young man named Bill Gates.