Joe Magnacca, who led a last-ditch effort to resuscitate RadioShack Corp., stepped down as chief executive officer Wednesday, a day after a bankruptcy judge signed off on the sale of about 1,740 stores to a New York hedge fund.
Magnacca made the announcement in an internal memo to employees.
On Tuesday, U.S. Bankruptcy Judge Brendan Shannon gave the 94-year-old company new life by approving hedge fund Standard General’s bid to acquire the stores and operate them in conjunction with Sprint.
No one has been named to replace Magnacca. A representative for Standard General said it would have no comment.
Magnacca, a former Walgreens executive, joined money-losing RadioShack in February 2013 and quickly tried to pump new energy into the electronics retailer by unveiling concept stores, revamping merchandise and boosting marketing. One example was a well-received 2014 Super Bowl ad that highlighted RadioShack’s efforts to reinvent itself by poking fun at its outdated image.
But sales didn’t bounce back, and the company was at odds with some lenders. A proposal to close up to a quarter of its stores last year was blocked by lenders including Salus Capital Partners, slowing RadioShack’s efforts to remodel its store base.
By late 2014, the Fort Worth-based company was low on cash but secured new financing from a group led by Standard General, a major shareholder. After a disappointing holiday season, the company filed for bankruptcy in early February.
In a statement, Magnacca said he was pleased with the court’s decision to approve the deal with Standard General and proud to have been associated with the “iconic” company.
“He was really good, and really competent, but they didn’t have enough capital to accomplish what they needed to,” said Michael Pachter, an analyst who followed the company for Wedbush Securities in Los Angeles.
Nearly half the 4,000 stores in operation when the company entered bankruptcy have already closed.
In documents filed with the court, RadioShack listed more than 350 stores set to begin going-out-of-business sales as soon as today. Among those are locations on Henderson Street in Cleburne and in Watauga Towne Crossing on Denton Highway.
Most stores being acquired by a Standard General entity called General Wireless will carry both the Sprint and RadioShack names, at least for a while. According to documents filed in Bankruptcy Court, the Sprint name will be the dominant brand on the storefront, although Sprint will take up only about a third of the space inside stores to sell wireless phones and services.
Permanent rights to RadioShack’s name were not part of the deal. That name, part of the company’s intellectual property, will be marketed in a separate sale. Standard General has a license to use the RadioShack name for six months, but if it doesn’t acquire the name in court, it may have to drop the moniker from the stores it has acquired.
The company has said six Fort Worth stores are among those included in the sale that will remain open, including locations on East Belknap Street, Altamesa Boulevard and Western Center Boulevard. Other stores included in the sale are in Arlington, Keller, Southlake, Weatherford, Azle, Saginaw, Bedford and Granbury.
It’s unclear what will happen to the company’s remaining headquarters operation in downtown Fort Worth. Once a major employer and civic leader, RadioShack has shrunk dramatically in recent years, to about 500 workers in recent weeks.
Under former CEO Julian Day, who focused on cost-cutting, the company pulled back on its involvement in Fort Worth community affairs.
Magnacca had tried to reconnect RadioShack with its heritage in Fort Worth. At the opening of a concept store in Sundance Square in fall 2013, designed in retro style to highlight the company’s history, he hosted a public event attended by Mayor Betsy Price and said the store was “our entry back into the community.”
But that store was among the first to close after the company entered Chapter 11 bankruptcy protection.
Steve Kaskovich, 817-390-7773