Shopko focuses on rural consumers with new merger

GREEN BAY, Wis. — Shopko Stores Operating Co. said Wednesday that Shopko and Pamida will merge to create one of the largest U.S. retailers focused on serving smaller and rural communities. The combined entity will have nearly 350 locations in 22 states and plans to accelerate new store growth in the second half of 2012 and beyond.

Financial details of the merger, expected to close in mid-February, were not disclosed. Both companies are owned by affilates of the private equity firm Sun Capital Partners.

The combined company will be based in Shopko’s home base of Green Bay, Wis., and will use the Shopko name. It will be led by Shopko president, chairman and CEO W. Paul Jones. Pamida president and CEO John Harlow will serve on the leadership team and help direct the integration process.

There will be no change to Shopko's stores, and approximately $80 million will be invested over the next 12 months in the conversion of most of Pamida's locations to the Shopko Hometown store concept and brand. Developed over the past three years, the Hometown format combines pharmacy services with general merchandise categories ranging from apparel to toys to electronics in s smaller-sized footprint that ranges from 15,000 to 35,000 sq. ft.

"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," said Jones. "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."

With annual revenues of $2 billion, Shopko operates 149 stores in 13 states located throughout the Midwest, Mountain and Pacific Northwest regions. Omaha, Neb.-based Pamida operates 193 stores in 17 states, primarily in the Mountain, North Central and Midwest regions, and has revenues of approximately $1 billion.