GREEN BAY, Wis. — Shopko Stores Operating Co. filed for Chapter 11 bankruptcy protection on January 15 and said it would shutter more than 100 stores as part of its reorganization plan.
In seeking court protection from creditors, Shopko cited assets of less than $1 billion and liabilities of between $1 billion and $10 billion. The general merchandise retailer, founded by a pharmacist in 1962, operates 367 stores in two dozen states under varying formats, including Shopko stores, Hometown stores, Shopko Express and Shopko Optical locations, according to its website.
In recent years, Shopko has expanded its Shopko Hometown variety stores concept to better reach smaller rural towns. Shopko acquired the stores from Pamida in 2012 and rebranded them to serve less-populated markets better.
Even before the bankruptcy filing, Shopko was in the midst of closing more than 60 stores, as management was buffeted by the company’s debt load and declining store traffic and sales.
“This decision is a difficult, but necessary one,” said chief executive officer Russ Steinhorst. “In a challenging retail environment, we have had to make some very tough choices, but we are confident that by operating a smaller and more focused store footprint we will be able to build a stronger Shopko that will better serve our customers, vendors, employees and other stakeholders through this process.”
Shopko has until March 14 to navigate its way through reorganization or it will have to liquidate its assets, according to bankruptcy court documents. The company said it plans to continue operating through the reorganization after securing $480 million in financing from a group of lenders led by Wells Fargo & Co. The financing will allow Shopko to continue to pay employees, vendors and suppliers.
In addition to the store closings (which includes the company’s original store, in Green Bay), Shopko said it will relocate at least 20 optical centers to freestanding locations. The company made four such relocations last year and said their performance was encouraging.
Shopko also intends to auction off what remains of its pharmacy business following the sales of pharmacy assets in December to Hy-Vee Inc., Kroger Co. and CVS Health.
“Throughout this process, all Shopko optical centers and pharmacies remain open and continue to deliver the high-quality products and services to which its customers are accustomed. All other stores remain open as the company continues to optimize its store footprint, the company said in a statement.
Shopko is owned by Sun Capital Partners, a private equity firm that paid $1.1 billion to acquire it in 2005. Shopko’s bankruptcy filing represents the second trip to bankruptcy court in as many years for a Sun-owned retailer. Omaha-based department store Gordmans Stores Inc. went bankrupt in March 2017 with a plan to liquidate.
Earlier this year, Jacksonville, Fla.-based Southeastern Grocers announced it had emerged from bankruptcy as a “stronger company with an optimal store footprint that is well positioned to thrive in the competitive retail environment.” The operator of the Winn-Dixie, BI-LO, Harveys and Fresco y Más grocery chains said it used the protections of Chapter 11 of the Bankruptcy Code to complete a financial restructuring that transformed its financial profile and reduced its overall debt level by about $600 million. The retailer had filed for bankruptcy protections two months earlier, saying it had shuttered 94 struggling stores as it sought a new path to long-term financial health.