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The newest victim of the ongoing wave of retail closures is not a department store, but a regional grocer.
Green Bay, Wisconsin-based Specialty Retail Shops Holding Corp., along with its 11 subsidiaries, has filed for Chapter 11 bankruptcy protection, the Green Bay Press Gazette reports. Among its subsidiaries is Shopko, a chain of grocery stores primarily based in the Upper Midwest.
Specialty Retail will close 105 Shopko stores in its attempt to cut operating costs and escape its mounting debt load, the Press Gazette reports. The chain claimed less than $1B in assets in its bankruptcy filings, compared to between $1B and $10B in debt liabilities. Specialty Retail has been owned by private equity firm Sun Capital Partners since its $1.1B purchase in 2005.
The closures would leave 262 stores open between Shopko and its affiliated brands, Shopko Hometown and Shopko Express. The company has until March 14 to prove that it can finance its operations going forward or secure a reorganization sponsor. Its lenders, Wells Fargo among them, have agreed to give Shopko $50M to finance operations until that deadline. Should Shopko obtain a sponsor, Wells Fargo is prepared to add $480M in additional financing, according to the Press Gazette.
As part of the reorganization, Shopko will auction its 146 pharmacies as it excises that facet of its business. It will apply the reverse strategy to 20 of its Shopko Optical locations that are currently within larger stores, turning them into stand-alone locations, Forbes reports.
Shopko's contraction stands in contrast to the expansion strategies of newer-to-market brands such as Aldi, Lidl, Sprouts Farmers Market and Whole Foods Market. Some may see vacated Shopko locations as potential backfill opportunities, while they may also be deterred by Shopko's report that the stores it is closing are its worst-performing locations.
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