The retailer that brought Americans the battery of the month club and CB radios is about to pull the plug, according to a report by Bloomberg News.
RadioShack (RSH) is said to be hours away from filing for bankruptcy protection, according to the report. As part of the agreement with creditors and other parties, the electronics chain would sell leases on about half of its 4,000 stores, while the half will likely be shuttered.
RadioShack declined to comment.
The actual timing of the filing is in flux, given that last-minute details are being ironed out, the report notes. The bankruptcy filing would come after the company thrived for a good part of its almost century-long history, with the past two decades marking a long decline, thanks to strategic missteps and changing consumer tastes.
It's unclear what form RadioShack would take after the bankruptcy. A group of hedge funds and other lenders who provided financing in October have agreed to provide more loans that will allow the company to operate in bankruptcy, Bloomberg News notes. The funding available to RadioShack may be less than $50 million, however. The deal wouldn't preclude other companies, such as Amazon, from picking up some of the leases.
"RadioShack died years ago; we're only now holding the funeral," said Gershon Distenfeld, director of high yield for AllianceBernstein, in an email. "Good active managers have avoided RadioShack for a long time. "
With plans to sell leases on 2,000 stores and close another roughly 2,000 outlets, it's clear that RadioShack won't continue in the form that Americans both loved and hated. While the brand still has a devoted following among electronics aficionados, it's also alienated some of its core consumer base through decades of poor marketing strategies, strange inventory mixes, and sometimes uninformed clerks.
RadioShack started out in 1921 by selling supplies to radio officers on ships, and by the 1970s was hugely popular with people who wanted to install CB radios in their cars, as well as with electronics tinkerers and geeks; it was where Apple co-founder Steve Wozniak bought parts to create a phone-hacking device in the early 1970s. In the late 1970s, it introduced the TRS-80, one of the first mass-produced personal computers, which became a surprise hit.
But RadioShack failed to leverage the TRS-80 into additional inroads into the computer market, and was soon overtaken by competitors in the 1980s and 1990s. Instead, it turned to cell phones, essentially turning the stores into mobile phone kiosks, which turned off many core customers and weakened the brand. When mobile carriers started opening their own stores, that dried up RadioShack's revenue from the products.
RadioShack also failed to ride the e-commerce boom, and at the same time launched a confusing marketing campaign, urging consumers to call it "The Shack." That effort to appear cool backfired, and the company soon went back to plain old "RadioShack."
By then, the mix of inventory struck many customers as simply odd. On top of that, RadioShack asked its clerks to record the personal information of its customers, which annoyed many consumers, who didn't want to provide their names and addresses while picking up a pack of wristwatch batteries.