iPhone Shortages Not Helping RadioShack as Consumer Sales Plummet

As a longtime key retail partner for Apple, RadioShack is once again offering the iPhone this holiday season, but finding the phone on the retailer's shelves may be difficult, reports Mitch Nolen for Seeking Alpha. According to Nolen, RadioShack stores nationwide are reporting massive shortages in iPhone units with most models not available in stores during the important holiday shopping season.

RadioShack currently advertises the iPhone on its website with no ability to purchase the phone online. Users instead are directed to find a RadioShack store to purchase a unit, but many stores do not stock the iPhone, offering only a "Ship To Store" option that takes several days to fulfill. This method of inventory is markedly different from competitors like Best Buy, which sell the iPhone online, in-store and via an in-store pickup option.

RadioShack franchise owner Gary Mahan claims his sales have plummeted 30 percent year-over-year due to declining stock, with a major lost opportunity this Black Friday.

Mahan believes that if he had received the iPhone 6 and 6 Plus, his one store on the Oregon coast could have made an extra $1,000 in profit over the Black Friday weekend, which would have been a happy holiday gift for him, he says. He couldn't speculate how that $1,000 in lost profit opportunity might extrapolate to other stores in RadioShack's chain of 5,387 corporate-owned and franchised locations.

The reasons for low inventories aren't clear, as Apple and other partners have managed to maintain some store supplies even amid high demand, but RadioShack's shortages may be due to the retailer's tenuous financial position. The company is close to being delisted from the New York Stock exchange and may be forced to file for Chapter 11 bankruptcy to protect it from its creditors.

RadioShack's cash on hand at the end of last quarter had fallen to just $30 million, down from $440 million a year earlier and leaving the company unable to afford shutdown costs involved in a planned closure of 1,000 stores.

To minimize risk as its cash dwindles, the retailer may be reducing standing inventory and changing to an on-demand model that supplies devices when customers order them in store. Apple also may be withholding inventory, opting to ship its popular iPhone models to retailers with higher-volume sales.