FORT WORTH, Texas _ RadioShack was forced to file for bankruptcy because a partnership with Sprint failed to generate the revenue the electronics retailer had anticipated from selling wireless products inside co-branded stores, the company's top executive said in a court filing.
Earlier this week, RadioShack and Sprint agreed to terminate their relationship and Sprint paid RadioShack a $12 million "wind down payment" in exchange for transferring leases for 115 stores to Sprint, according to the filing from Dene Rogers, president and chief executive officer of General Wireless Operations, the company that operates RadioShack.
In a memo posted online, Sprint said it would convert several hundred stores into Sprint corporate-owned stores and redeploy signage, displays and inventory from other locations to other Sprint locations.
Sprint began pulling its wireless product displays from some RadioShack stores in recent days in a sign that the partnership was crumbling. General Wireless filed for Chapter 11 bankruptcy court protection in Delaware on Wednesday evening.
In his declaration to the court, Rogers _ who took over as CEO last April _ said RadioShack made considerable improvements to its operations by the end of last year and its core retail business "had turned a corner and become profitable." However, "the Sprint relationship did not yield the benefits that (General Wireless) had anticipated."
"Sprint mobility sales dropped off precipitously in the fourth quarter of 2016, following the U.S. presidential election, calling the original arrangement into question," Rogers said in the document. After not receiving projected commissions from Sprint last year, the company concluded that it might not receive payments until 2018.
"Management made numerous attempts to compel Sprint to make the payments beginning as early as March 2016 and continuing into early 2017, all of which were rebuked," Rogers wrote.
