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GREEN BAY, Wis. — Regional discounters Shopko Stores and Pamida plan to merge, creating a retail operation with nearly 350 stores in 22 states.
Regional discounters Shopko Stores and Pamida plan to merge, creating a retail operation with nearly 350 stores in 22 states.
Financial terms of the merger, which is expected to close in mid-February, were not disclosed.
The combined company will be headquartered in Shopko’s home town of Green Bay, Wis.; it will also use the Shopko name and be led by Shopko chairman, president and chief executive officer W. Paul Jones. Pamida president and CEO John Harlow will serve on the merged company’s leadership team and help direct the integration process.
The move marks a kind of homecoming for Pamida, which for several years was a subsidiary of Shopko. Both chains are now owned by affiliates of the private investment firm Sun Capital Partners Inc.
Shopko has annual revenues of $2 billion and operates 149 stores in 13 states located throughout the Midwest, Mountain and Pacific Northwest regions. Omaha, Neb.-based Pamida has revenues of about $1 billion and operates 193 stores in 17 states, primarily in the Mountain, North Central and Midwest regions. Both chains focus on serving small and mid-sized towns and rural communities, Shopko with discount stores and Pamida with smaller outlets.
In recent years Shopko has developed a smaller format called Shopko Hometown for smaller markets, and the merged company intends to spend about $80 million over the next year to convert most of Pamida’s outlets to that banner. New store openings are also planned, beginning in the second half of the year.
"Merging Pamida and Shopko is a great move for our businesses and our customers given our complementary strengths, store networks and consumer-centric retail models," Jones said. "The Shopko Hometown store format, featuring our unique merchandising strategy and improved store design, is an ideal fit for the smaller communities that Pamida serves with its exceptional service and community-minded approach. We intend to be the leader in this category by combining the best of Shopko and Pamida in our aggressive new store growth plans."
The Shopko Hometown format has a multi-department offering – including pharmacies, apparel consumer electronics – in outlets ranging from 15,000 square feet to 35,000 square feet in size.
Shopko has previously bought seven stores from Pamida and converted them to the Shopko Hometown format, and company officials say the result has been gains in store traffic, sales and profitability. That success inspired the merger, according to the company.
