RadioShack will stop selling T-Mobile USA devices in September at its U.S. retail stores in favor of Verizon Wireless, the company announced today.
T-Mobile products will be pulled from shelves on Sept. 14. Verizon Wireless devices will hit RadioShack’s website and more than 4,300 company-operated stores in the United States the next day, Sept. 15.
RadioShack will continue to offer T-Mobile’s postpaid products in its 680 Target Mobile stores.
The move will cost RadioShack $3 million in unsalable T-Mobile cell phones it had in stock at the end of June. The company also warned it will take a $23 million charge in the third quarter on a payout to T-Mobile and additional inventory losses.
T-Mobile called the split with RadioShack a “mutual decision” and said it would pursue deals with other retailers.
“T-Mobile and RadioShack today announced a mutual decision to no longer sell T-Mobile service plans and devices in RadioShack retail locations,” the company said in a statement. “T-Mobile will continue to expand distribution in national retailers across the country and expects to announce further channel growth in the coming weeks.”
UPDATE: Company retail director James Kirby later said, “After careful consideration, we decided that to in order to increase the effectiveness of our retail network and in line with our sales strategy, T-Mobile will exit RadioShack retail locations, effective September 15, 2011. We are currently focused on higher return national retailer opportunities and we expect to announce new channel growth in the coming weeks, which will more than double the number of RadioShack doors currently offering T-Mobile products and services.”
RadioShack’s decision to ditch T-Mobile came after the wireless operator allegedly breached its contract with the electronics retailer last summer. The two companies have yet to resolve the issue.
“We are continuing discussions with T-Mobile concerning resolution of their breaches,” RadioShack said in its quarterly report filed with the SEC today. “The outcome of this action is uncertain and the ultimate resolution of this matter could have a material adverse effect on our results of operations, financial condition and business operations.”
Weak sales of T-Mobile products also have been a drag on RadioShack’s revenue. The company said in its quarterly report that the “underperformance” of T-Mobile’s postpaid products were partially to blame for a drop in its profit margin over the first half of this year.
RadioShack has not disclosed specifics of how T-Mobile violated its contract, stating only in February that the operator had until March to “cure the breaches” and later pushing out its deadline on the issue until April.
Verizon Wireless CEO Dan Mead said in a statement the deal with RadioShack would “substantially” expand its reach. “We view this as an opportunity to substantially extend our customer reach at a time when our portfolio of mobile products has never been more exciting,” he said.
RadioShack also offers products from AT&T and Sprint.