Independent RadioShack stores to sell Verizon wireless service

Independent RadioShack stores will begin selling Verizon Wireless (NYSE:VZ) service, according to people familiar with the matter who asked not to be identified. The move comes as RadioShack struggles with sluggish sales of T-Mobile USA service.

Wireless products accounted for close to half of RadioShack’s sales during 2010.

Wireless products accounted for close to half of RadioShack's sales during 2010.

It's unclear how many of RadioShack's roughly 1,100 independent stores will begin selling Verizon Wireless service, or when they will add Verizon offerings to their shelves. Verizon Wireless and RadioShack representatives declined to comment on the news.

RadioShack currently sells service from Sprint Nextel (NYSE:S), AT&T Mobility (NYSE:T) and T-Mobile in its 4,675 corporate stores; RadioShack stopped selling Verizon service in 2005. However, RadioShack recently added Verizon service to its roughly 1,400 Target kiosks.

During its first-quarter earnings report, RadioShack reported a 30 percent drop in net profit and blamed sluggish wireless results on declines in T-Mobile postpaid sales.

RadioShack said it continues to work closely with T-Mobile to resolve what it has termed "material breaches" in its contract with T-Mobile. The retailer said discussions are "constructive" and that it expects the matter to be resolved, though it did not give a timeframe for doing so.

RadioShack said its mobility business accounted for 29 percent of its sales in 2008, but that ratio ballooned to 47 percent last year. Thus, it's not surprising the retailer's independent outlets would want to add Verizon service into the mix; Verizon notched 1.8 million net customer additions in its first quarter, just behind AT&T's 2 million. During the same period, T-Mobile lost 99,000 net subscribers.

Meanwhile, Standard & Poor's said late Thursday that it will drop RadioShack from the S&P 500 stock index after the close of trading June 30 in favor of Marathon Petroleum Corp. RadioShack's $1.4 billion market capitalization makes its a better fit for the midcap market space, S&P said, and the company's stock will be moved to the S&P MidCap 400 index.

For more:
- see this recent Star-Telegram article
- see this WSJ article (sub. req.)
- see this this Forbes article

Special Report: Mobile retailing in flux: Carriers vs. big-box retailers

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