Sprint (NYSE: S) will take on a prominent role in the rebranding of the new, slimmed-down RadioShack as the retailer prepares to exit bankruptcy protection.
A bankruptcy judge approved RadioShack's restructuring plan, and while the new company will be owned by hedge fund Standard General, Sprint will be a driving force in the new company's retail presence. RadioShack's bankruptcy plan is not completely final but is expected to be fully in place by mid-April.
According to the Wall Street Journal, which reviewed RadioShack's bankruptcy exit plan, Sprint will handle the sales of cell phones in RadioShack's stores. Standard General is taking over around 1,740 of RadioShack's stores, down from more than 4,000 the retailer had open last year.
Under the deal, Sprint will command around a third of the space in more than 1,400 RadioShack locations, and will use its own retail employees to sell phones and service. According to the plan, Sprint will pick up the tab for the overhead cost, and will distribute commissions on its merchandise and help with advertising. Additionally, at most of those stores, Sprint's logo will be more prominent than the RadioShack logo.
In any event, Sprint is going to significantly expand its retail distribution. "We're pleased with the outcome of the auction and are looking forward expanding our nationwide footprint," Jaime Jones, Sprint's president of the postpaid and general business organization, said in a statement to FierceWireless. "We are working fast to begin operationalizing now that the transaction has been approved and expect that this new format will appeal to customers and deliver valuable cross-marketing opportunities to both companies."
Before the transaction, Sprint had around 1,100 company-owned retail stores, a smaller retail footprint than any of its rivals. AT&T Mobility (NYSE: T) owns more than 2,000 retail stores. In February on the company's last earnings conference call, Sprint CEO Marcelo Claure said Sprint had around 500 or 600 fewer stores than T-Mobile US (NYSE:TMUS) and around 3,000 fewer than Verizon Wireless (NYSE: VZ), according to a Seeking Alpha transcript of his remarks. Verizon owns around 1,700 of its own stores but also has a large number of dealers.
It's unclear if Sprint will close any of its retail stores once the RadioShack deal is put in place. A Sprint spokesman declined to comment.
Sprint aims to use the expanded distribution to increase its sales and attract new customers. Claure said distribution, along with "a great network" and a "compelling offer," will help Sprint gain ground.
RadioShack itself plans to cut down on the number of items in its stores, and focus on higher-margin items like home chargers, batteries and speakers.
However, a key remaining point of contention in RadioShack's bankruptcy exit plan is that Salus Capital Partners, RadioShack's largest creditor, has first claim on RadioShack's trademarks, patents and customer data. Therefore, according to the WSJ, unless Standard General can convince Salus to sell it the intellectual property, the new RadioShack might not be called RadioShack for much longer.
- see this WSJ article (sub. req.)
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