Fort Worth, Texas – RadioShack quietly began its own two-phase inventory liquidations in about 1,000 underperforming stores starting last October, the chain revealed in its Chapter 11 filing.
According to court documents, the chain initially identified about 275 “Phase One” stores that were losing money and poorly located. RadioShack stopped replenishing those locations in October and began inventory sales at up to 25 percent off. Discounts were raised to 50 percent off by January.
In December, RadioShack took similar action at about 730 “Phase Two” stores, which performed slightly better than their predecessors but were also losing money.
As many as 2,100 of its least productive stores have been unable to find a buyer and, under a prepackaged bankruptcy plan, will be shuttered in three phases beginning this month following fire sales. The liquidations will be conducted by Hilco Merchant Resources, Gordon Brothers Retail Partners and Tiger Capital Group and are expected to run through March.
The remaining stores would be acquired by General Wireless, a newly created affiliate of majority shareholder and lead lender Standard General.
As many as 1,750 of those locations would be co-branded with Sprint and would feature dedicated store-within-a-store Sprint shops.
Not included in the Chapter 11 filing are the more than 1,100 dealer-franchised stores located across 25 countries; stores operated by RadioShack’s Mexican subsidiary; and the company’s operations in Asia.
“These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders,” said beleaguered CEO Joe Magnacca.
The sale is subject to the approval of the U.S. Bankruptcy Court in Delaware, and other parties will have an opportunity to bid for RadioShack’s assets.