The future of ShopKo

Yesterday, ShopKo agreed to be purchased by an investment firm out of the Twin Cities for about $1 Billion (when the assumed debt is figured into the equation). It is tough to discern right now what that means for the company. As many of you know, ShopKo is based out of Green Bay and is a major Wisconsin employer. The company is also one of the few, if not only, regional discounters still out there. Investment firms have been buying into retail for two reasons. One is that they can raise capital in a way that the retail firms cannot independently. In that, ShopKo employees have some reason for hope. The company may see a cash infusion that helps it right its ship and get back on the track it seemed to be on in the late 1990's before a series of poor decisions hurt the company's financial performance. On the other hand, we have the second reason investment groups buy retail. Often times the real estate underneath the stores is worth more than the company is. I suspect ShopKo's new owners are going to give retail an honest shot. After all, collecting growing profits year after year are ultimately better than dismantling a company and selling its assets and real estate. ShopKo has a tall order ahead of itself. It has to become a regularly profitable company that eventually grows into a national chain. Otherwise, in the next five years, we could see a retail landscape in the Upper Midwest and Pacific Northwest that is devoid of an old friend. An old friend, might I add, that pioneered such innovations as cash registers at the front of the store, in store pharmacy, in store vision care, and yes, even the grocery store/retail store hybrid, but which failed to capitalize on those innovations.

Sources
Appleton Post-Crescent
Market Watch
Associated Press
Green Bay Press-Gazette