The parent company of troubled electronics retailer RadioShack look set to file for Chapter 11 bankruptcy protection for the second time as soon as Tuesday as it looks to unload even more stores.
The parent, General Wireless Operations, has already begun closing 200 stores, the Wall Street Journal reported citing sources, and the company is negotiating with Sprint and others about shuttering more. A spokesman for General Wireless could not immediately be reached.
When RadioShack, based in Fort Worth, Texas, first sought bankruptcy in February 2015, it sold some 2,400 of its U.S. stores to General Wireless, an affiliate of Standard General, which is a hedge fund that led a rescue loan for the retailer the year before. General Wireless has since set up “stores within stores” at 1,750 of those locations for Sprint where the wireless network operator sells its service and smartphones.
According to the Journal, RadioShack’s current management is betting the retailer can be viable long term as a smaller chain. As recently as 2013, there were 5,000 or so RadioShack stores in the U.S. Ninety-seven-year-old RadioShack had been the preeminent electronics chain for decades, selling CB radios and cables and connectors, but the store had trouble finding its niche in the smartphone era.
The liquidation of Circuit City Stores in 2009 was expected to give other electronics retailers some breathing room, but Amazon.com kept eating away at their market share. Best Buy (BBY) has found its way through the wreckage and stabilized its business, but hhgregg, a smaller furniture and electronics chain, filed for bankruptcy on Monday and said it would close one third of its stores.
Electronics were also a weak category during the holiday season in the absence of a hot new smartphone or gadget: Target (TGT) said comparable sales of the items fell sharply during the period, while Best Buy reported a decline in U.S. comparable sales.