Shopko is closing all of its remaining stores.
The big-box retailer revealed its plans to liquidate earlier this week after failing to find a new buyer for the insolvent company.
“Despite the company’s best efforts, it was unable to find a buyer for its go-forward business as a going concern,” Russ Steinhorst, chief executive officer of Shopko, said in a statement. “As a result, Shopko will commence an orderly wind-down of its retail operations beginning this week.
“This not the outcome that we had hoped for when we started our restructuring effort,” Steinhorst added.
The liquidation process, which will be led by Gordon Brothers, is expected to last between 10 and 12 weeks.
Shopko, the general merchandise chain store that sold everything from apparel and accessories to electronics and home goods to pharmaceuticals, filed for Chapter 11 bankruptcy on Jan. 16. At the time, the retailer had 367 physical stores, spread across 25 states, primarily in the Midwest and western U.S., and employed roughly 15,000 people. The retailer also had a now-defunct web site.
The company, which was founded in 1962 in Green Bay, Wisc., had fallen on hard times as it struggled to keep up in an era of online shopping and against competitors like Target and Walmart that have larger distributions.
“A confluence of factors contributed to [Shopko’s] need to commence these Chapter 11 cases, including the general downturn in the retail industry and the marked shift away from brick-and-mortar retail to online channels,” Steinhorst wrote in the original bankruptcy documents. “The combination of these factors has made it increasingly difficult for [Shopko] to maintain their cost and capital structure as sales have remained depressed, impairing [Shopko’s] liquidity.”
Steinhorst pointed out that Shopko has a “substantial physical footprint,” which has “decreased significantly” in recent years, adding to lost income.
In fact, Shopko’s earnings before interest, taxes and amortization, fell 21 percent over the last year, according to the court documents, from more than $45 million in 2017 to about $35 million a year later.
The ceo pointed out that operating costs related to Shopko’s pharmacy, in particular, “has reached its limit.”
“Shopko lacks purchasing scale to purchase drugs at costs similar to large national pharmacy chains, and has seen cost increases in excess of industry trends,” Steinhorst wrote.
At the time of bankruptcy filing, the company planned to trim about 40 stores from its fleet, but quickly updated the number to around 100 as it reevaluated its real estate. Then in February, Shopko released a list of another 139 stores that would close by May 2019. That brought the number of store closures up to 251, or about 70 percent of Shopko’s original store fleet.
Shopko is just one of many retailers to announce store closures so far this year. Earlier this month, teen apparel and accessory retailer Charlotte Russe revealed plans to liquidate. The Gap, Victoria’s Secret, Abercrombie & Fitch, Chico’s and J.C. Penney have also all unveiled store closures this year.