Shopko, the general merchandise retailer with stores located throughout the Central, Western and Pacific Northwest regions of the U.S., announced that it, along with its subsidiaries, has filed for Chapter 11 bankruptcy protection. In its filing, Shopko cited excess debt and ongoing competitive pressures as the reason for the measure. Shopko reported assets of less than $1 billion and liabilities between $1 billion and $10 billion. Shopko also announced that it will be closing 38 stores (in addition to the 45 it closed during the past year), relocating more then 20 optical centers to freestanding locations, and conducting an auction process for its pharmacy business.
Shopko, which currently operates over 360 stores, said it will continue to operate and serve its customers, vendors, partners and employees during the restructuring process with $480 million debtor-in-possession financing it secured from lenders. "This decision is a difficult, but necessary one," said Russ Steinhorst, Shopko's CEO, in a statement. "In a challenging retail environment, we've had to make some very tough choices, but we're 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."
Total Retail's Take: Shopko's bankruptcy filing was not unexpected. For example, according to Chain Store Age, McKesson Corp. has said it supplied Shopko with $67 million in drugs since Nov. 11, but hasn't been paid since early December. Then, this week, the drug supplier asked a judge for a restraining order to keep Shopko from selling the medications it has supplied. Finally, a McKesson attorney said during a court hearing that Shopko was expected to file for bankruptcy protection on Jan. 15. However, it's not all bad news for Shopko. The company's optical business is a bright spot. Encouraged by the performance of its four freestanding optical centers that were opened in 2018, Shopko announced that in addition to relocating more then 20 optical centers to freestanding locations, it plans to open additional ones in 2019.