RadioShack to File 2nd Bankruptcy – Can the 96-Year-Old Company Survive?

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RadioShack is expected to yet again file for Chapter 11 bankruptcy protection, which could happen as soon as today. It first filed back on Feb. 5, 2015, when it opted to sell roughly 2,400 of its U.S. stores to Standard General hedge fund affiliate General Wireless.

Now General Wireless is RadioShack’s parent company. And in typical parental fashion, it has high hopes for its troubled little offspring.

In fact, General Wireless believes a smaller group of still-profiting RadioShack shops can “survive in the long term” if it files a second bankruptcy, reported The Wall Street Journal this morning (March 7).

But what General Wireless appears to be disregarding still are the causes responsible for RadioShack’s first bankruptcy filing two years ago…

RadioShack Is Repeating Its Mistakes

A new, clear strategic management plan has yet to be released by RadioShack’s parent company.

The same problem — lack of a clear plan to adapt to the times — is what led RadioShack into bankruptcy the first time around.

“[RadioShack management] focused on changing the company logo several times, for example,” Forbes reported back on Feb. 5, 2015, “rather than addressing changing consumer demands — and building the scale and scope to keep up with larger retailers and manufacturers.”

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On top of that, RadioShack’s management opted to sell shoddy products.

“[RadioShack management] led the company from one declining business to another – International Business Machines (NYSE: IBM), PC-compatible Tandy Computers, and ‘The Repair Shop’ at RadioShack – and from one declining brand to another (e.g., Realistic, Optimus, Presidian, and Accurian),” Forbes stated.

Worse yet, when Amazon.com Inc. (Nasdaq: AMZN) actually joined talks to acquire RadioShack amid revelations of this first Chapter 11 bankruptcy filing, the ‘Shack’s leaders ultimately refused.

Bad call.

And while some critics blame the online retailer boom for RadioShack’s demise, it was actually this fellow brick-and-mortar store that dealt a death blow to RadioShack …

Wal-Mart Stores Inc. (NYSE: WMT) had been inflicting serious injuries upon RadioShack for quite some time leading up to the 2015 bankruptcy filing…

Sam Walton’s leviathan retail chain sold – and still sells – virtually everything that RadioShack does, but at lower prices and at more convenient locations. A decade ago, when Americans were still opting to do their shopping primarily at brick-and-mortar locations, Wal-Mart offered a one-stop shopping experience that included the latest tech gadgets alongside pantry goods and clothing, etc.

And, again, at lower prices than RadioShack. Just after this first bankruptcy filing two years ago, the beleaguered RadioShack got a break when Sprint Corp. (NYSE: S) joined up as its business partner.

But while Sprint did add lucrative wireless and smartphone services to the company — in a moved Wired hailed with this March 31, 2015, headline: “Sprint Has Officially Saved RadioShack from Extinction” — it was too little, too late.

Now Sprint is standing alongside RadioShack as its business partner stares down “Chapter 11 Bankruptcy 2.0” – again, with nary a clear business strategy in mind.

At this point, it will take nothing short of a retail miracle for RadioShack to survive…

 

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