ASHWAUBENON, WI (WTAQ) - Shopko announced on Wednesday that it has filed for bankruptcy and will close 38 stores as part of its restructuring efforts.
The Ashwaubenon-based retailer announced that it has obtained $480 million in financing from lenders, led by Wells Fargo, in order to fund and protect its operations during the bankruptcy process.
The federal bankruptcy court in Nebraska has been asked by Shopko to allow it to continue to pay wages, salaries, and benefits, and pay vendors and suppliers during the bankruptcy process.
“This decision is difficult, but a 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 company's assets are listed by court documents at between $500 million and $1 billion, with liabilities estimated between $1 billion and $10 billion.
A list of the 38 closing stores, plus previously announced closures are posted on a separate website dedicated to the bankruptcy.
Included in the list are seven stores from Northeast Wisconsin, and over a dozen stores statewide, which all are set to shut their doors in April.
- 216 S. Military Ave., Green Bay
- 3415 Calumet Ave., Manitowoc
- 1578 Appleton Rd., Menasha
- 699 S. Green Bay Rd., Neenah
- Shopko Express – W3208 Van Roy Rd., Buchanan
- Shopko Express – 2101 E. Evergreen Dr., Appleton
- Shopko Hometown – 1010 S. Mainline Dr., Seymour
- 1200 Main Street, Stevens Point
- 1800 Plover Road, Plover
Additional stores in Madison, West Bend, and La Crosse will also be closed.
Shopko also plans to move more than 20 optical centers to freestanding locations.
Four freestanding optical centers it opened last year have encouraged the company and they will look to grow their optical business. According to the company, all optical centers will remain open through the transition.
The companies remaining pharmacy business will be auctioned, according to Shopko.
The bankruptcy announcement on Wednesday is just 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 and the full-size department store in Menasha.
Jim Loebl, the Chair of Business Administration at the University of Wisconsin-Green Bay, offered his thoughts on the impact of Wednesday's announcement.
First of all, he noted that filing for bankruptcy isn't necessarily the "kiss of death" for a company.
"We tend to look at bankruptcy and think, 'Oh, they're dead on arrival and that'll be it,'" explains Loebl. 'But, a lot of companies have reemerged from bankruptcy."
He brought up a series of industry titans in the automotive industry that have previously filed for bankruptcy and emerged as a healthy business entity.
"GM [General Motors] and Chrysler went bankrupt and they reemerged and are thriving companies today," he says.
He also noted that bankruptcy doesn't mean that all stores are immediately boarded up and swept away.
"That does not mean that it necessarily will have a fire sale, sell all the merchandise, and close all its doors altogether, the way that Bonton did, the parent of Younkers," explains Loebl.
One possibility in the companies restructuring plan is that they strategically downsize to continue operations in certain locations.
"I would think that what they are going to try to do is bear down and stay in locations where they kind of are the primary player, in smaller towns," he says.
Numbers regarding the amount of job loss have not yet surfaced, but with 37 stores closing the writing is somewhat on the wall.
"I don't think there's much question there will be some people losing their jobs," says Loebl.
While the number of jobs impacted locally will depend on a question regarding how drastically they restructure the company.
"Will they have to, in cost-cutting, eliminate positions at their corporate headquarters and so on," asks Loebl.
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