Powell’s Shopko will close — along with all the others

Posted 3/18/19

While Powell was set to keep its Shopko store if the chain survived, the company announced Monday that it will shut down all of its remaining stores by mid-June.

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Powell’s Shopko will close — along with all the others

Posted

While Powell was set to keep its Shopko store if the chain survived, the company announced Monday that it will shut down all of its remaining stores.

The Powell Shopko is expected to close by June 16, along with the chain’s other 119 locations; the only part of the business that could survive is Shopko’s optical business. Roughly 5,000 people will lose their jobs across the West and Midwest, according to WLUK-TV in Wisconsin.

Shopko CEO Russ Steinhorst said it was “not the outcome we had hoped for” when the company began its restructuring efforts and filed for Chapter 11 bankruptcy in January.

“We want to thank all of our teammates for their hard work and dedication during their time at Shopko,” Steinhorst said in a Monday statement.

The company had hoped to continue operating its most profitable stores — including the one in Powell — saying the slimmed-down “New Shopko” presented “a very attractive investment opportunity.” However, the struggling retail chain was unable to find a buyer.

“I’m sorry for the people who are losing their jobs,” Christine Bekes, executive director of Powell Economic Partnership, said Monday.

Bekes said, while the news of the closure is “disappointing,” it may create opportunities for other local businesses, such as Murdoch’s, Ace Hardware and Lavender Rose.

“It’s certainly a loss for Powell in terms of product selection,” she said. “I hope they can fill that gap.”

Shopko officials said they’re committed to an “orderly wind-down” of the store’s operations and will try to minimize the impact on their employees, customers, vendors and the communities they serve.

The company entered Chapter 11 bankruptcy in January, citing excess debt and pressures from online competition as key factors. At the time, Shopko had more than 14,000 employees and operated 360 stores, but it had since started dropping down to 120 stores and around 60 optical centers.

Shopko’s creditors have charged that a part of the issue is that, despite the company’s struggles, Shopko was still paying dividends to its private equity owners — and borrowing money to do so.

Shopko’s creditors recently asked the presiding bankruptcy court judge to force the company’s owners to return $117 million in dividends that were paid out over the last four years, saying some were illegal, the Green Bay Press Gazette reported Monday.

At a bankruptcy court hearing in Nebraska last week, one of Shopko’s former landlords complained that Skopko’s owners “just drained this company.”

“It was a good, reliable company,” said Dennis Lutgen of Beloit, Kansas, population 3,700. Lutgen, who’d rented space to two Shopko locations, said he’d agreed to a 40 percent reduction in rent after being told that would keep the store open. But Shopko announced in February it would be shuttering that location.

Before even knowing that the entire chain would be closing, Lutgen predicted that many small towns would be impacted.

“Not everybody has a credit card; not everybody can pick up the phone and order something from Amazon — which is wrecking these small towns, because they’re not going to have even a store like this,” he told U.S. Bankruptcy Court Judge Thomas Saladino.

“People in this town, in Beloit, Kansas, are going to have to drive 30 miles to buy a pair of tennis shoes,” Lutgen said, saying the same thing would happen in other states.

As the list of Shopko closures grew from 39 stores in December, to roughly 80 in January and to 251 in February, the Powell location had managed to escape the chopping block. But they all got the ax on Monday.

The company had been set to hold an auction today (Tuesday), but that was canceled after Shopko failed to draw interested buyers. The liquidation of the stores and inventory is expected to conclude within three months.

“Whether or not there will be any money at the end of the day, nobody knows at this point,” Judge Saladino had remarked in court last week.

At its Board of Trustees meeting in February, Powell Valley Healthcare said it was unlikely to collect on unpaid debts from the company and the Powell City Council voted earlier this month to hire outside counsel to help the city figure out how to collect $6,000 worth of unpaid utility bills.

Prior to the string of closures, Shopko operated stores in Powell, Greybull, Worland, Thermopolis, Afton, Buffalo, Douglas, Green River, Lander, Mountain View, Newcastle, Torrington and Wheatland.

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