Shopko, the operator of general merchandise stores based in Green Bay, WI, filed for Chapter 11 in the District of Nebraska.
The retailer, with stores throughout the Central, Western and Pacific Northwest, said it is seeking to facilitate the restructuring as a result of excess debt and ongoing competitive pressures. 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 prepetition 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 an additional 38 stores, relocating over 20 Optical centers to freestanding locations, and conducting an auction process for its pharmacy business.
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. Parties interested in receiving additional information about the company’s pharmacy auction
process should send inquiries to shopko@hl.com.
Additionally, encouraged by the performance of the four freestanding Optical centers that were opened in 2018, Shopko plans to continue to grow its optical business by opening additional freestanding Optical locations during 2019.
Court documents list the company’s assets at between $500 million and $1 billion, with liabilities estimated between $1 billion and $10 billion. Firms in the sports industry landing on the top-20 unsecured creditors list include Payless Shoesource, owed $1.58 million; HanesBrands, $1.12 million; Coleman, $998,964; and Adidas, $835,465.
The bankruptcy is the latest in a string of announcements from Shopko. Last month, it announced plans to close 39 stores, mostly Shopko Hometown stores, and sell the pharmacy business at more than 40 locations. Last week, the company confirmed plans to close the Shopko Hometown in Seymour, the Shopko Express in Buchanan and the full-size department store in Menasha.
Shopko is owned by Sun Capital Partners, which took the retailer private in 2005.
Shopko said it 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, Shopko 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.
