(Bloomberg)—Efforts by Shopko Stores to find a buyer have stalled and the Midwestern retailer is making preparations for a bankruptcy filing, according to people with knowledge of the matter.
The general merchandise chain, owned by Sun Capital Partners Inc., could still reach agreement on an out-of-court restructuring, but that scenario looks increasingly unlikely, said the people, who asked not to be identified because the process isn’t public. The situation remains fluid, the people said, with no guarantee that a court filing will happen at all, or that it will include a pre-negotiated plan to save the company.
Representatives for Shopko, based in Green Bay, Wisconsin, and Sun Capital, based in Boca Raton, Florida, declined to comment.
It would be the second trip to bankruptcy court in as many years for a Sun-owned retailer. Gordmans Stores Inc., the Omaha-based department-store chain, went bankrupt in March 2017 with a plan to liquidate, a casualty of slowing mall traffic and online rivals such as Amazon.com Inc.
Shopko runs 363 stores in 24 states under various formats, according to its website. 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 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 and other less-populated markets, and rebranded those stores as part of its smaller-format ShopKo Hometown division.
Part of the chain’s success was due to its presence in those markets that larger competitors overlooked, said Antony Karabus, chief executive officer of HRC Retail Advisory. Now, “Amazon is giving everyone in the smallest communities access.”
Shopko is working with restructuring lawyers from Kirkland & Ellis as well as investment bank Houlihan Lokey and consulting firm Berkeley Research Group, the people said. Representatives for those firms did not comment on their involvement; the engagements were previously reported by Debtwire.
To contact the reporters on this story: Lauren Coleman-Lochner in New York at [email protected]; Eliza Ronalds-Hannon in New York at [email protected]; Katherine Doherty in New York at [email protected] To contact the editors responsible for this story: Rick Green at [email protected] Shannon D. Harrington
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