RadioShack Files for Bankruptcy, Will Co-Brand Stores With Sprint

Carriers Claims 1,750 Locations, Retailer Will Remain as a Store-Within-a-Store

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Radio Shack's 2014 Super Bowl ad was a hit.
Radio Shack's 2014 Super Bowl ad was a hit.

RadioShack, which is filing for bankruptcy imminently, is completing a deal with Sprint that would let its name live on at as many as 1,750 locations.

Sprint confirmed the deal in a statement on Wednesday and said the stores will be co-branded, with Sprint being the primary brand on storefronts and in marketing materials. The RadioShack brand would continue as a store-within-a-store concept at locations acquired by Sprint.

"Sprint and RadioShack expect to benefit from operational efficiencies and by cross-marketing to each other's customers," Sprint CEO Marcelo Claure said in a statement.

RadioShack confirmed the sale in its own statement.

The electronics retailer has a rocky marketing past including triumphs, like its comedic 2014 Super Bowl spot, and blunders such as its short-lived attempt to dub itself "The Shack" in 2009.

CMO Jennifer Warren, who was one of Ad Age's Women to Watch, has taken calculated risks with the brand's advertising since joining the company in 2013. She led the consolidation of the brand's marketing with GSD&M and brought some work in house to save money. She also led an aggressive rebranding that included a new tagline and brand platform aimed at positioning the company as a hub for the hottest technology. The push, which featured a spot starring Robin Thicke, was aimed at younger consumers.

That was followed by a Super Bowl spot that flashed back to the 1980s, poking fun at the retailer's dated image in an effort to announce it was remaking its stores, merchandise and image. The ad opened with this line: "The '80s called: They want their store back." It was a win creatively but did little to improve sales or prevent store closures.

Most recently, RadioShack tapped Weird Al Yankovic for a holiday push that presented the retailer as a destination for electronic gifts for everyone.

The company's marketing budget has declined in recent years. It spent $78 million on U.S. measured media in 2013, down from $88 million a year earlier, according to Kantar Media.

For Sprint, its new stores will be used to combat Verizon and AT&T, carriers with much larger subscriber numbers and retail locations.

Sprint released its third quarter results on Thursday morning, posting revenue of $9 billion and an operating loss of $2.5 billion. Sprint added 30,000 branded postpaid customers, an increase after several quarters of consistent subscriber loss.

On an earnings call, Mr.Claure said the carrier plans to add "at least 500 stores this year." He said retrail traffic was up 10% in December. The carrier operates around 1,100 stores nationwide; Verizon has more than 1,700 stores and AT&T owns more than 2,000 stores.

"Stores have been one of several major areas where Sprint and T-Mobile have both suffered from a lack of scale compared to AT&T and Verizon," wrote Jan Dawson, an analyst at Jackdaw Research, "and this deal is a cost-effective, rapid way for Sprint to make some rapid progress."

Sprint's retail agency is Leo Burnett. Sprint is one of the nation's largest advertisers, spending $1.6 billion in the U.S. in 2013, according to the Ad Age DataCenter.

~Bloomberg News contributions~

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