RadioShack this week filed for bankruptcy a second time, raising questions as to how U.S. wireless carrier Sprint – which used the company’s retail locations for distribution – will cope with the loss of nearly 1,000 physical locations.
Sprint’s President of Omnichannel Sales Kevin Crull on Wednesday indicated the store closings “are not material to Sprint’s overall sales results,” and said Sprint has decided to take over corporate ownership of “several hundred” locations. But BTIG’s Walter Piecyk expressed skepticism in a Friday note that Sprint would come away unscathed.
According to Piecyk, the hit to Sprint’s store count will be reflected in a reduction of postpaid phone gross additions in the March quarter. Though BTIG already cut its postpaid phone net add estimate to 50,000 after Verizon’s unlimited announcement, Piecyk warned further cuts from analyst peers could drag the consensus down even further.
But Piecyk added that Sprint could be hit in another dimension – churn – as customers seek out in-person locations to resolve service issues.
“With industry churn at record lows, it’s important to recognize that a branded store also contributes to customer satisfaction,” Piecyk wrote. “Existing customers use stores to upgrade phones, pay bills and handle equipment or service issues. We believe these customer service related items can account for more than 50 percent of a stores activity. While the loss of 1,000 RadioShack stores may ‘not impact sales’ in the near-term, these other benefits and a reduction of a community presence is not costless for Sprint.”
While Sprint already had a plan in place to add up 500 to 1,000 stores over the next 18 months as part of its initiative to bring back or create 5,000 U.S. jobs, it appears that number now will only be making up for losses instead of making expansion headway.
Sprint’s store roadmap comes in a bit less favorable than that of T-Mobile, which last month revealed plans to add 2,500 MetroPCS and T-Mobile stores this year. Of those, 1,000 will be branded T-Mobile locations, with most scheduled to be opened within six months, the Un-carrier indicated on its earnings call.
Sprint has talked about spreading its turnaround narrative by telling customers about the benefits of its LTE Plus network. And while physical stores certainly aren’t the only medium for that message, it certainly doesn’t seem like a lack of store penetration will help.