Shopko has filed a Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the District of Nebraska and announced, in concert with the legal action, that it would close 38 stores, relocate about 20 optical centers to freestanding locations, and conduct an auction process for its pharmacy business.
The company said it needs to restructure because of its excessive debt and ongoing competitive pressures. During the restructuring process, Shopko said it will continue to operate and serve its customers, vendors, partners and employees.
Shopko has obtained up to $480 million debtor-in-possession financing from pre-petition secured lenders led by Wells Fargo. The retailer maintained that the incremental liquidity would ensure that it can pay suppliers and other business partners and vendors in a timely manner for authorized goods and services provided during the Chapter 11 process.
In addition to the store closings and pharmacy auction, Shopko noted that, encouraged by the performance of four freestanding centers opened in 2018, it would continue to grow the optical business by opening additional freestanding locations during 2019.
“This decision is a difficult, but necessary one,” said Russ Steinhorst, Shopko CEO. “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.”