On Wednesday, January 16th, Shopko, a general merchandise store chain throughout the Central, Western and Pacific Northwest regions of the U.S., announced that it, along with its subsidiaries, has filed voluntary petitions for a court-supervised financial restructuring under Chapter 11 of the United States Bankruptcy Code.
As part of the announcement, Shopko released the names of 32 additional stores it will be closing as part of its restructuring, including the store in Memphis.
Previously the local outlet had not been part of the company’s restructuring efforts, which had called for the closing of roughly 70 stores across Colorado, Iowa, Idaho, Illinois, Indiana, Kansas, Michigan, Minnesota, North Dakota, South Dakota, Oregon, Nebraska, Utah and Wisconsin beginning in March. However the bankruptcy notice on January 16th was accompanied by plans to close an additional 32 stores, including Memphis, on April 15th of this year. Also included in the latest round of store closing’s was Carrolton, MO and Bloomfield, Ft. Madison and Burlington, IA. The Quincy, IL will remain open.
A total of 103 stores will be closed by the retailer, including 38 full-sized Shopko stores, two Express store fronts and 63 of the company’s smaller, Hometown stores in rural settings, such as Memphis.
Shopko is seeking to facilitate the restructuring as a result of excess debt and ongoing competitive pressures. The petitions have been filed in the U.S. Bankruptcy Court for the District of Nebraska. During the restructuring process, Shopko will continue to operate and serve its customers, vendors, partners and employees.
Shopko has obtained up to $480 million debtor-in-possession (DIP) financing from certain of its pre-petition secured lenders, led by Wells Fargo, N.A. as administrative agent, to help fund and protect its operations during the Chapter 11 process. This incremental liquidity will ensure that suppliers and other business partners and vendors will be paid in a timely manner for authorized goods and services provided during the Chapter 11 process, in accordance with customary terms.
“This decision is a difficult, but necessary one,” said Russ Steinhorst, Chief Executive Officer. “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.”
In order to position the Company for future success, Shopko has announced that it will be closing the additional 38 stores, relocating over 20 Optical centers to freestanding locations, and conducting an auction process for its pharmacy business.
All other stores remain open as the Company continues to optimize its store footprint.
Shopko is also filing customary first day motions that, once approved by the court, will allow the Company to smoothly transition its business into Chapter 11, including, among other things, granting authority to pay wages, salaries, benefits, and pay vendors and suppliers in the ordinary course for authorized goods and services provided on or after the filing date.
Founded in 1962 and headquartered in Green Bay, Wisconsin, Shopko Stores Operating Co., LLC is a $3 billion retailer that operates more than 360 stores in 26 states throughout the Central, Western and Pacific Northwest regions. Retail formats include 126 Shopko stores, providing quality name-brand merchandise, great values, pharmacy and optical services in small to mid-sized cities; 5 Shopko Express Rx stores, a convenient neighborhood drugstore concept; 6 Shopko Pharmacy locations; 4 Shopko Optical locations and 234 Shopko Hometown stores, a smaller concept store developed to meet the needs of smaller communities.