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Serving Northern St. Louis County, Minnesota

Ely retail picture suffers a blow with Shopko closure

Keith Vandervort
Posted 3/20/19

ELY— Shopko announced this week that all of its remaining stores will be closing later this year. All stores, including the 38,000-square-foot Shopko Hometown here are expected to close by …

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Ely retail picture suffers a blow with Shopko closure

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ELY— Shopko announced this week that all of its remaining stores will be closing later this year. All stores, including the 38,000-square-foot Shopko Hometown here are expected to close by mid-June.

The closure will leave a big hole in the retail picture for Ely and some residents were already calling on the city to take steps to find an alternative.

“This is a devastating blow to Ely and all the small towns that rely on their Shopko stores,” said Ely resident Bill Erzar.

Local shopper Peggy Struna agreed and called on city officials to take action. “The mayor and the city need to seek out a replacement tenant for this much-needed store,” she said. “This is a major loss to this community!”

At the Ely City Council meeting Tuesday night, Mayor Chuck Novak said he is uncertain what will happen to the building once Shopko moves out. “It wasn’t a total surprise that this ended up this way, and the only statement I have is that it sucks,” Novak said. “It will be no more. I don’t have a crystal ball as to how it’s going to work.”

Novak is hopeful that the public’s trek out of town for shopping is a short-term deal, not a long one. “I cut the ribbon in 2008 when the store opened here, and I get to wrap the ribbon back up in 2019, and that’s kind of a sad day,” he said. “It really is.”

The Wisconsin-based retailer which owns and operates 134 Shopko stores, 176 Shopko Hometown locations, 18 Shopko Pharmacy locations, and five Shopko Express stores, filed for bankruptcy on Jan. 16. Company officials had initially indicated they planned to continue to operate the Ely store and had been attempting to sell off some of its properties as part of a restructuring. On Monday, however, the company announced that despite its best efforts, a buyer was not found after announcing a plan for financial restructuring in January.

The company had scheduled an auction for Tuesday morning in the hopes of driving up the price of initial bids that were due last week. On Monday, it announced the auction was canceled and that one of its bankruptcy consultants will oversee a liquidation process over the next 10-12 weeks.

“This is not the outcome that we had hoped for when we started our restructuring efforts,” said Russ Steinhorst, Chief Executive Officer of Shopko. “We want to thank all of our teammates for their hard work and dedication during their time at Shopko.”

The wind-down of its retail operations will start this week, with the liquidation process ending in about 10-12 weeks.

The company has six other locations in the Northland, including stores in Duluth, Aitkin, Moose Lake, and Two Harbors. Like Ely, all were initially spared as part of the original restructuring plan. All are now expected to close by June 16.

David Livingston, a Midwestern retail analyst, said the chain’s demise is no surprise. “They weren’t able to offer anything compelling compared to Walmart, Target, Amazon,” he told Minnesota Public Radio.

Livingston noted that creditors have also challenged more than $100 million in dividends paid to equity owners in recent years, reportedly paid with borrowed money. Livingston said he believed management hadn’t been seriously interested in emerging from bankruptcy.

Shopko, formerly called Pamida, has been located in Ely since the 1970s. The company moved from its downtown Chapman Street location in 2012 and opened a new facility on Ely’s east end near Hwy. 1.

Before the pharmacy closed last month, amid reports that the company owed $67 million to a pharmaceutical supplier, the Ely store had about 18 employees, a number that almost doubled during the summer months.

MPR News contributed to this report.