Radio Shack Bankrupcy

[miguelvp]

If not smaller, I think I can fit 4 typical RS in there.

Edit: and never enough space to get more than one person across any aisle

[dannyf]

Is General Wireless formed by RadioShack?

Didn't sound like you read the article you are trying to discuss.

[Tandy]

Here is what I understand from the filing.

RadioShack has entered Chapter 11 bankruptcy protection so that it can do the following ...

1. Sell leases of its best positioned stores to Sprint where the stores will sell exclusively sprint mobile contracts and approximately a third of the store space will be given over to this. The rest of the store will be RadioShack branded most likely primarily selling mobile accessories such as chargers and cases. It is as yet unclear if RadioShack Corporation will run these prats of the store or if Sprint will be purchasing the RadioShack trademarks or perhaps enter into a licence agreement with the RadioShack Corporation in order to be able to use the RadioShack branding in Sprint owned and managed stores.

2. Close the remaining stores, chapter 11 enables them to get out of leases and prevents their lenders who were up until now preventing them from closing stores from interfering with the process.

They have mentioned that they are offering a large portion of their assets for sale at 363 auction, this is usually used as a way to basically sell the company without transferring its liabilities to the new owner.

My guess is this is what the plan is...

• Close as many stores as possible (confirmed)
• Sell the valuable leases to Sprint (confirmed)
• Retain the RadioShack Trademarks and web store
• The only remaining physical locations would be franchised (possibly including the sprint ones)
• Use the franchise network for collect-in-store purchases made on-line

This way they would emerge from their chapter 11 with a massive reduction in their liabilities for retail space and would be able to be more aggressive with their on-line presence, while earning additional revenue from their franchisees. There are many companies that operate an almost exclusive franchise business. RadioShack uses their buying power to secure good prices for the franchise network and takes none of the risks of running the stores.

The trouble is if history is anything to go by they are likely to make a complete mess of things and end up selling parts of the business to Sprint that will leave them vulnerable and we will ultimately see them disappear.

[dannyf]

1. Sell leases

They cannot sell leases in a proceeding. Their choices are either to take them, or to reject them.

The article quoted earlier was pretty clear about what they intend to do.

[dannyf]

It is as yet unclear if RadioShack Corporation will run these prats of the store

It is crytal clear in the article that RadioShack will not run those stores -> those stores are to be jointly owned jointly by one of Radioshack's current shareholders and Sprint.

Something like this was talked about a while ago (last year), except with ATT as the partner.

What it shows you is something I repeated earlier: Radioshack's most valuable asset is its wireless business. Those hobbyist related stuff is a money loser for Radioshack.

[cosmicray]

After spending about 90 minutes at the local RS store this morning, this is my understanding of how this is playing out.

Some stores are closing, some store are not. Those in the latter category are probably the ones heading to Sprint. The stores closing are probably the underperforming stores.

As of yesterday, everything in this store was 25% off. As of today, everything is 30%-60% off. Which is which is highly subjective, and only known when the SKU is scanned at a register. There is no clearly defined shelf marking. The store manager was of the impression that markdown level was related to recent sales activity. Those items that sold better got less markdown.

There was no Apple product left at this store. It had been transferred to a store in the larger city, 40 miles away, a few weeks back, and was being sold there at full price.

In 2 weeks, this store will close. What product is remaining will sent to a store in a larger city. I plan on visiting again in 7-10 days, to see what is left, and if the markdown levels had advanced.

The store was reasonably busy this morning (bargain hunters somewhat) and the store manager remarked that the first 2 hours generated more sales than entire days had recently. I told him "you need to gou out of business more often".

I pulled a couple of items off the shelf (small solar panels) that actually had no markdown. He thought these were something that had not sold in a very long time, and probably had dropped off inventory. I noted many items were hanging on shelf pegs which had different SKU tickets. Up until last night, this store was supposed to be a clearance store, and receive stuff from other stores to be sold at clearance. That changed yesterday. There was an AT&T Wireless rep in the store, checking out the atmosphere, and what was selling & not selling.

I spent about $55, and got a $50 savings (according to the receipt).

I did ask about the disposition of the parts bins. He didn't know but would ask his regional manager if they could sell those.

More as I think about it.

[dannyf]

For their hobbyist offerings, they tried to compete with the internet on variety (massive inventory + parts numbers) and prices (dah!).

What they failed to comprehend is that they are offering a valuable service and need to be compensated for such services: I wouldn't blink an eye if they charged 10x more for their resistors, or capacitors, or solder irons, etc., because if you need it right there, those guys are the only ones in town.

High prices wouldn't have materially changed their sales, but would have significantly enhanced their margin. After all, what's the point of making a sale if you lose money on it?

[Zero999]

For their hobbyist offerings, they tried to compete with the internet on variety (massive inventory + parts numbers) and prices (dah!).

What they failed to comprehend is that they are offering a valuable service and need to be compensated for such services: I wouldn't blink an eye if they charged 10x more for their resistors, or capacitors, or solder irons, etc., because if you need it right there, those guys are the only ones in town.

High prices wouldn't have materially changed their sales, but would have significantly enhanced their margin. After all, what's the point of making a sale if you lose money on it?

I agree with you that one should be prepared to pay a considerable premium to buy it strait off the shelf, rather having to wait for delivery and have friendly staff to provide advice but Tandy were never any good at that. They often wouldn't carry what I wanted and the staff were completely clueless.

[mtdoc]

Stopped by the local Shack today again to see if anything had changed. They said RS released a list last night of the first round of corporate stores to be closed and they weren't on it.   Still no store-wide discounts.

I took some pics to show what a more typical RS looks like.  I only took pics of the electronics and parts bin stock and not the consumer electronics and phone junk. Interestingly they had just started stocking and put up a display with the cute but overpriced "littlebits" stuff.

[Tandy]

Stopped by the local Shack today again to see if anything had changed. They said RS released a list last night of the first round of corporate stores to be closed and they weren't on it.

List of store closures is available at
http://radioshackcorporation.com/restructuring/store-info.php

[cosmicray]

Stopped by the local Shack today again to see if anything had changed. They said RS released a list last night of the first round of corporate stores to be closed and they weren't on it.

List of store closures is available at
http://radioshackcorporation.com/restructuring/store-info.php

Why are the stores on that list divided up into Initial Tranche, Second Tranche and Third Tranche ?

[dannyf]

Why are the stores on that list divided up into Initial Tranche, Second Tranche and Third Tranche ?

Limited resources from the liquidator, inventory consolidation and free publicity, among others.

[tom66]

Part of the problem is that the market that Make, etc. appeals to is generally: internet savvy, probably on a low income or budget, and usually not time dependent.

An individual like that probably isn't going to go out and buy an Arduino for 50% more when they could order one online unless they absolutely need it.

[Richard Crowley]

Why are the stores on that list divided up into Initial Tranche, Second Tranche and Third Tranche ?

In structured finance, a tranche, is one of a number of related securities offered as part of the same transaction. The word tranche is French for slice, section, series, or portion, and is cognate to English trench ('ditch'). In the financial sense of the word, each bond is a different slice of the deal's risk. Transaction documentation (see indenture) usually defines the tranches as different "classes" of notes, each identified by letter (e.g., the Class A, Class B, Class C securities) with different bond credit ratings (ratings).
http://en.wikipedia.org/wiki/Tranche

There are 17 stores here in Oregon on the list:

Initial Tranche Stores (these are all major shopping malls except the first one)
Halsey St, Portland
Lancaster Mall, Salem
Washington Square, Tigard
Clackamas Town Square, Portland

Second Tranche Stores
Creekside, River Road, Keizer (Salem)
Santa Clara Square, Eugene
Martinazzi Square, Tualatin
10th St, Hillsboro
Riverside Rd, Medford (mall)
Bear Creek Plaza, Medford
Garden valley, Roseburg (mall)

Third Tranche Stores
Heritage Mall, Albany (mall)
South Gateway, Medford
SE 82nd, Happy Valley
SE 82nd, Portland
Tanasbourne Village, Hillsboro
River Center, Eugene (mall)

So, two of the three stores closest to me are on this list.
The store that is within walking distance (~1 mile) of my house is NOT on this list.

I suspect that the mall locations are more desirable to turn in to YACPS (yet another cell phone store)

[linux-works]

anyone have any OLD pics of radio shack stores?  pre-digital would be preferred, as I'd love to see what it used to look like in the 70's or 80's (I first started going there in the early 70's, myself).

[GreyWoolfe]

The store in Daytona Beach is in the second Tranche but the hole in the wall store in New Smyrna Beach isn't even on the lists.   

[mtdoc]

The store in Daytona Beach is in the second Tranche but the hole in the wall store in New Smyrna Beach isn't even on the lists.   

It may be that is a franchise store, not a corporate store. The RS employee I talked to today said the list was only for corporate stores.

I wonder what this bankruptcy will mean for the franchise stores?

[iampoor]

Interesting, my local store isnt on the list and already closed!

[Stonent]

anyone have any OLD pics of radio shack stores?  pre-digital would be preferred, as I'd love to see what it used to look like in the 70's or 80's (I first started going there in the early 70's, myself).

This is a very accurate depiction of the mid to late 80s:

[Stonent]

http://www.radioshackcatalogs.com/

And your new favorite site for the next few hours.

[miguelvp]

Went today to one that is closing, everything was on clearance 30% to 60% off. They added on top of the 60% off a 25% extra.

PIR sensor regularly $9.99  -> $3.00
QFP 32-100 pins reg: $2.97 -> $.89
Desoldering iron reg: $14.99 -> $6.74
4-way crimp tool reg: $9.99 -> $4.49
Emergency USB reg: $5.97 -> $2.25

The last one is pretty much a 2 AA battery to 5V 500mA step up converter by enercell that looks handy to power dev boards.

Sure not high ticket items and the desoldering iron is only a 45W one and the spec says the tip will reach 390 C (734 F) so I thought it will be handy to have for under $7.

I think I'm going tomorrow to get what is in the electronics parts trays 4 cabinets full of parts, LEDs, resistors, caps, steper motors, fuses, etc..

[linux-works]

I went to 2 in the bay area and neither seem to be closing.  none had any discounts at all.  one place looked identical to how it looked months ago.  the other had major sections roped off but nothing at all listed as a mark-down.  maybe the bay area stores are generally doing ok?  the nearest one to be closing is palo alto (a rich area, high rent, that is).  odd that RS is doing 'well' in the bay area, with so many other, much better places to buy parts and stuff.

[GreyWoolfe]

The store in Daytona Beach is in the second Tranche but the hole in the wall store in New Smyrna Beach isn't even on the lists.   

It may be that is a franchise store, not a corporate store. The RS employee I talked to today said the list was only for corporate stores.

I wonder what this bankruptcy will mean for the franchise stores?

Didn't think of that.  I can see it as it is a small store in a small plaza.  I haven't talked to any employees yet on the basis of it might be a bit of a sore subject.  I will have to visit the company store in Daytona to see if they are discounting anything I would want.

[cosmicray]

The store here is a small store in a small plaza. City pop about 2500, surrounding rural area maybe 15k-20k. This is a corporate store, and it is closing. The reason it was there at all was the WalMart at the other end of the development. WalMart draws significant traffic, but not enough to keep the RS from closing. The WalMart has incrementally edged into some of the product lines that RS stocked.

[Derick Freese]

The store in Daytona Beach is in the second Tranche but the hole in the wall store in New Smyrna Beach isn't even on the lists.   

For some reason, I thought you lived in Orlando.