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Shopko faces restructuring; fate of Ely location uncertain

Keith Vandervort
Posted 1/17/19

ELY - Shopko, the Wisconsin-based retailer with a store in Ely, is closing stores in Wisconsin and several other states, giving this town’s largest retailer an uncertain future.

The company …

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Shopko faces restructuring; fate of Ely location uncertain

Posted

ELY - Shopko, the Wisconsin-based retailer with a store in Ely, is closing stores in Wisconsin and several other states, giving this town’s largest retailer an uncertain future.

The company announced Wednesday 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.

The company is seeking to facilitate the restructuring as a result of excess debt and ongoing competitive pressures. The petitions were 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 in 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.

 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.

All other stores remain open as the company continues to optimize its store footprint.

 The move has many in Ely wondering how long the Shopko Hometown facility will remain open. The Goodwill store here will close its thrift store and donation center on Saturday.

There were no reports on if or when the Ely facility would cease operations. The Ely store manager did not provide a comment.

Ely Mayor Chuck Novak said Tuesday that if the Shopko closed here it would have a negative impact on the retail atmosphere. “I haven’t heard anything on the closing,” he said Tuesday night, “but I do know that many pharmacy customers there are moving their prescriptions to the clinic.”

A Shopko spokesperson did not return messages or answers to questions provided by email. Sun Capital Partners, Shopko’s parent company, declined to comment for this story. 

Shopko, formerly called Pamida, has been located in Ely since the 1970s. The company moved from its downtown Chapman Street location in 2012 and opened a new facility on Ely’s east end near Highway 1.

The Ely store has about 18 current employees, a number that almost doubles during the summer months.

The Green-Bay, Wis.-based department store chain operates 363 stores in 24 states under various formats, according to its website. Shopko has said the closures are dictated by the long-term outlook on profitability, sales trends and growth potential.

The Green Bay Press-Gazette reported last weekend that Shopko added to the list of stores closing, in Appleton, Grafton, La Crosse, Menasha, Seymour and Sussex. Before, it had announced only one Wisconsin closure, in Mauston.

Pharmacist James Ruben opened the first store in 1962, about the same time that Walmart Inc. and Target Corp. went into business, and Shopko went public in 1991.

Sun Captial bought the company in 2005 for about $1.1 billion. The following year, real estate investment trust Spirit Finance Corp. bought the retailer’s real estate in an $815 million sale-leaseback transaction.

In 2012, ShopKo acquired Pamida's 193 stores for an undisclosed sum to expand its presence in rural markets.

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