RadioShack owner General Wireless Operations Inc. is contemplating filing for its second Chapter 11 bankruptcy protection in about two years, and the 1,500-store chain is already closing some 200 stores, The Wall Street Journal reports.
The filing could come as swiftly as Tuesday, and the company is in talks with partner Sprint, which helps run about a third of its brick-and-mortar operations in co-branded stores, and other potential partners to further shrink its store number, according to the report.
In recent weeks, the company has also laid off dozens of employees at its Dallas Fort Worth headquarters.
This wouldn't be Radioshack's first trip into bankruptcy court. Just two years ago, the electronics chain sought to restructure $1 billion in debt. In 2015, 1,740-plus RadioShack stores were sold for $26 million to hedge fund Standard General at a bankruptcy auction that was marked by a battle with hedge fund Salus Capital, which had warned against the significant credit bid in that sale.
Last year, newly arrived RadioShack CEO Dene Rogers promised a new business model for the once iconic tech retailer based on omnichannel retail and e-commerce. But its rebrand and partnership with Sprint have failed to gain traction in a market increasingly dominated by Amazon, which has grabbed massive market share in peripherals and batteries. In an era when many fewer hardware nerds build their own PCs and stereo systems, Radioshack is still struggling to keep up with business from cellphone providers and online players.
Amazon has been assertive in the electronics segment generally, accounting for a whopping 90% of the $5.6 billion growth in U.S. consumer electronics in 2015, according to a note from Deutsche Bank analysts last year. Rival Best Buy has mostly held its own in the face of that competition, but it continues to struggle with sales, and smaller retailers in the space, including regional player HHGregg (which filed for bankruptcy this week), have faltered.
RadioShack is loaded up with debt, too, making its turnaround more difficult, though sources told The Wall Street Journal that fewer stores would enable it to operate more efficiently. A Standard General spokesperson declined to comment to The Wall Street journal.