“This is not the outcome that we had hoped for when we started our restructuring efforts.” Those were the words of Shopko Stores CEO Russ Steinhorst after the retailer announced Monday it would close its remaining 120 stores by June 16.
Shopko had declared bankruptcy in January, saying then it would close about 100 stores. Like many retailers seeking bankruptcy protection, Shopko had held out hope it could find a buyer and save a core group of its stores. When the Wisconsin-based retailer nailed down $480 million in financing from a lending group, the company figured that would buy it the needed time.
Shopko’s business model, however, made restructuring difficult. The pharmacies, which had been a financial drain on the company, were auctioned off. The 51 Shopko optical centers, which perhaps held the most long-term revenue potential, will now be sold to pay off bankruptcy court claims. No buyer was found for the department stores.
The decision had already been made to close the Shopko in Savanna, and now Dixon and Freeport are among the cities to lose the general merchandise retailer.
In the Amazon age, this story has become all too familiar, ending with “this is not the outcome that we had hoped for” from other CEOs. We saw it with Bon-Ton Stores, the parent company of Bergner’s, another bankruptcy that affected the Sauk Valley. An 11th-hour deal with an investment group that included Northland Mall owner Namdar Realty Group, broke down when the bankruptcy court judge shot down a request for a $500,000 work fee.
“... We are disappointed by this outcome and tried very hard to identify bidders interested in operating the business as a going concern,” Bon-Ton President and CEO Bill Tracy said.
A similar story is playing out with Sears Holdings Corp., which includes the Kmart brand. As big-box retailers continue to struggle, more companies will disappear during bankruptcy rather than reorganize.
While the loss of these retailers is felt nationwide, it cuts much deeper in small towns like Dixon and Sterling. The product choices are already limited, and losing certain brands will likely fuel more shopping excursions to larger towns. Luckily, there are other pharmacy options here – but some smaller towns have none to send Shopko customers’ prescription drug business to.
Life also becomes much more difficult for small-town mall owners like Namdar. The clock is ticking to replace its longtime anchor stores, J.C. Penney and Bergner’s, or find other creative solutions to filling the space and carving out a long-term future for Northland Mall.
Fewer investors are willing to put skin in the game to save brick-and-mortar stores from the behemoth that is online retail. The chances continue to grow that bankruptcy will mean death for big-box retailers and the standard response from CEOs will be that it’s not the outcome they had hoped for.