Shopko files for bankruptcy; Albert Lea store to remain open
Rochester, Fairmont included in additional 38 stores to close
Shopko Stores Operating Co. LLC announced Wednesday it has filed for Chapter 11 bankruptcy protection.
In addition to a court-supervised financial restructuring, the company will close 38 additional stores, relocate over 20 optical centers to freestanding locations and conduct an auction for its remaining pharmacy business.
Stores to close in Minnesota are in Rochester, Fairmont, Mahnomen, Warroad and Paynesville. Optical centers in Rochester and Fairmont will be relocated to freestanding locations. The Albert Lea store will remain open.
“This decision is a difficult, but necessary one,” CEO Russ Steinhorst said in a news release. “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.”
The Green Bay, Wisconsin-based company stated excess debt and ongoing competitive pressures led to the filing, which was done in U.S. Bankruptcy Court for the District of Nebraska. The restructuring will give additional time and financial flexibility to evaluate options for the business, including a possible sale of the company or certain assets as it is in discussions with possible investors and debt holders.
According to the Green Bay Press Gazette, the company has reported assets of less than $1 billion and liabilities between $1 billion and $10 billion.
Shopko has obtained up to $480 million in financing from lenders, led by Wells Fargo Bank, to help fund and protect operations during the reorganization. This will ensure that suppliers and other business partners and vendors be paid in a timely manner for goods and services provided during the process.
The filing came after Shopko last month announced it was selling 42 of its 227 pharmacy locations to Kroger and 22 to Hy-Vee.
“Today’s announcement provides clarity about the path forward for us, and we are confident the outcome will be a stronger Shopko for you, our valued customers, through the process,” Steinhorst said in a letter to customers on the company’s website.
Continuing stores will be open normal hours and will continue to offer customer programs and loyalty programs and honor return policies, warranties, gift cards and merchandise credits.
Steinhorst stated the company will continue to provide updates about the developments that take place with the reorganization. A website at info.shopko.com will provide information about the restructuring.
Started in 1962, Shopko has served small and mid-size cities across the Central, Western and Pacific Northwest regions of the country. It operates more than 360 stores in 26 states.