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Shopko Stores: Chains
built 630 days ago
Discount chain ShopKo Stores Inc. got nervous this spring, as shopper after shopper shunned its stretchy nylon track pants. They had a comfortable elastic waist. They had bright, contrasting stripes down the sides. But they simply weren't budging at their original price of $16.99.
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In 2000, ShopKo added 76 Pamida stores, bringing the chain to nearly 240 units by the end of the year. Everything seemed to be going according to plan, but the rapid expansion soon took its toll. Distribution problems began to emerge, ShopKo's debt load increased to $840 million, and a recession hit the retail industry particularly hard. Known as a decisive leader fond of dramatic strokes, Podany wasted no time bringing a halt to the expansion strategy. In January 2001, he instituted a drastic restructuring, shuttering 23 stores and a distribution center, and furloughing 2,500 employees.
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ShopKo Stores operates general merchandise and drug store outlets through two chains in the U.S., ShopKo and Pamida. Its stock currently costs $25.35 a share and has generally traded above the $24 price since the sale was announced April 8.
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ShopKo, a chain of 141 stores that likens itself to Target Corp.'s discount stores, began hunting for a technical edge early last year. The 39-year-old retailer, which ... operates Pamida, a 229-store chain of small mostly rural discount stores, was facing a difficult year in 2000, which ultimately ended with disappointing sales of $3.5 billion and a $15.8 million loss. It subsequently had to cut jobs, close some stores and put remodeling and expansion plans on hold.
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Later described as "a parent company that's been like a banker," Supervalu provided more financial than managerial support to ShopKo during its quarter-century of ownership. That relative autonomy was passed down through the ranks; though middle and upper executives guided the chain's general strategies, store managers were allowed to choose particular merchandise lines and models to suit their local clientele. As a result, ShopKo's merchandising emphasis began to shift to housewares such as small kitchen appliances and some soft goods, including clothing, during the 1970s. Perhaps most importantly, the company pioneered several new categories for discount stores. ShopKo was among the first discounters to include pharmacies in its outlets beginning in 1971. In 1978, it became one of the first to not only sell eyeglasses but ... to offer in-store eye examinations.
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Will ShopKo expand with more Express Rx outlets? While Bettiga emphasized that it's too early to discuss expansion, he said that the chain operates in 16 states from the Pacific Northwest into Wisconsin and upper Michigan.
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