Sprint Teams Up With Bankrupt RadioShack

Well, that was quick -- RadioShack has officially declared bankruptcy, and Sprint has announced plans to take over some of its stores, but not exactly as many as were expected.

Rather than acquire the retail storefronts outright, Sprint Corp. (NYSE: S) said Thursday afternoon that it would "expand its branded store distribution by approximately 1,750 stores" in partnership with RadioShack. The carrier is essentially leasing space in these RadioShack storefronts to form co-branded "store-in-stores" that will exclusively sell mobile devices across Sprint's brand portfolio, including Boost Mobile and Virgin Mobile USA Inc. (NYSE: VM), alongside RadioShack products, services and accessories.

Sprint CEO Marcelo Claure said in a statement that the pair will "benefit from operational efficiencies and by cross-marketing to each other's customers." Sprint will get one third of the retail space at each location, and RadioShack will get the rest. Sprint says it will be the primary brand on storefronts and in marketing materials.

Read more about mobile strategies on the 4G LTE channel here on Light Reading.

On the carrier's third-quarter earnings call today, Claure stressed its need to expand distribution. Sprint currently has more than 1,000 company-owned retail stores, a number it says will more than double if the transaction is approved. Of course, it will be sharing mindshare with a bankrupt retailer, but it remains to be seen how that affects Sprint's reputation. (See Sprint, RadioShack Shack-Up Looks Inevitable .)

The companies expect the transaction to be finalized in the coming months, subject to approval by a Delaware bankruptcy court and to a closing period. Sprint's shares were trading up 24 cents -- or 5.24% -- to $4.82 after the deal was confirmed Thursday.

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Phil_Britt 2/17/2015 | 8:05:00 AM
Too much physical space I don't know that Sprint needs this many stores, and the footprint of most RS locations much more than what Sprint would need. Apple stores have large footprints, but there are far fewer of them and much more demand for the company's products.
kq4ym 2/9/2015 | 10:15:07 AM
Re: brand cache In our smaller community we've seen the Radio Shack brand come and go. From Radio -Shack "departments" in our hardware and even a furniture store, to currently a six-month old store in a small strip mall. Selling primarily phones and accessories just didn't seem like a sturdy enough business tactic. and it's not clear yet what will become of this particular one, closed or taken in by Sprint.
mhhf1ve 2/9/2015 | 2:39:58 AM
Re: brand cache It will be interesting to see how sprint tries to keep these stores alive. Tmobile seems to have copied apple stores in many locations, so sprint doing more store-in-stores might make sprint look a bit less than what peopl might expect of its 3rd place carrier status. Maybe a google mvno could make the store-in-store a bit more attractive?
danielcawrey 2/8/2015 | 12:28:03 PM
Re: brand cache This failure by RadioShack has seemed inevitable for some time, and it's good that Sprint is going to at least try to keep some stores alive.

However, it may end up being an odd pairing, and what I think will happen is Sprint will need to completely take over some of these stores in order to be successful.
mhhf1ve 2/6/2015 | 5:18:42 PM
Where else could Sprint go? I think this is perhaps the best of bad choices for Sprint... Other retail locations are probably more expensive, and losing thousands of outlets that already push significant amounts of Sprint products/services is not a good business move, either.  

If Amazon can help out these locations, it might turn into a win for Sprint. Maybe. But then, it's not clear how Amazon would want Sprint to sell phones... and not a Fire phone? 
DHagar 2/6/2015 | 4:25:02 PM
Re: brand cache MitchWagner, now that is a scary proposition if the stores are rotten.

My thinking was that if this is a strategic move by Sprint that they have figured out a way to maintain the Sprint image and makeover the RS stores, and they are getting a "deal" on the real estate, it may be a smart move.  If not, they have just tied themselves to a very heavy anchor.
DHagar 2/6/2015 | 4:19:13 PM
Re: brand cache smkinoshita, great - it's good to have marketing expert opinion!  I am with you in your thinking on the benefit is on the balance sheet.  Clearly that don't want to be labeled with a "losing proposition".
Mitch Wagner 2/6/2015 | 10:44:06 AM
Re: brand cache Jason - True. I was trying to amplify your point. Not only is the branding problematic, but the stores themselves might be rotten. 
jasonmeyers 2/6/2015 | 7:14:42 AM
Re: brand cache I do think it's a bad deal for Sprint -- I said "hooking your brand to a seemingly obsolete one in a semi-aligned market might not be the smartest move"
Mitch Wagner 2/5/2015 | 9:59:06 PM
Re: brand cache jasonmeyers - "What's the rationale here for Sprint? Cut-rate rent?"

Well, you could argue that real estate is real estate. 

On the other hand, a cynic might argue that these stores are a bad deal for Sprint.

A big part of RadioShack's business of late has been phone sales. And here we have an entire chain of locations where it's been demonstrated that phone sales are insufficient to keep a nationwide chain afloat.

RadioShack seems to be like the one storefront in every neighborhood where one restaurant after another comes in, opens with a flash, then folks a short time later. The location looks great -- but something about it is cursed.
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