Shopko to merge with Pamida

Published: Wednesday, Jan. 4 2012 10:24 p.m. MST

Crowds line up to buy gifts on Black Friday at ShopKo, Nov. 26, 2010. Shopko will merge with Pamida creating one of the largest discount retail chains in the country.

Tom Smart, Deseret News

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SALT LAKE CITY — Two of the nation’s largest general merchandise retail chains Wednesday announced a merger that will create one of the largest national retailers focusing on serving smaller and rural communities. The combined entity of Shopko and Pamida will include nearly 350 stores in 22 states, with plans for more growth in the second half of 2012, a news release stated.

Financial details of the merger, which is expected to be finalized in February, were not disclosed. No Utah Shopko stores will be affected.

With annual revenues of $2 billion, Shopko, based in Green Bay, Wis., operates 149 stores in 13 states located throughout the Midwest, Mountain States and Pacific Northwest regions, while Pamida, based in Omaha, Neb., operates 193 stores in 17 states, primarily in the Mountain States, North Central and Midwest regions with revenues of approximately $1 billion. There are no Pamida stores in Utah.

The combined company will be headquartered in Green Bay and will use the Shopko name and be led by Shopko president, chairman and chief executive officer W. Paul Jones. Pamida president and CEO John Harlow will serve on the leadership team and help direct the integration process.

Shopko spokesperson Tara Burns said there will be no change to any existing Shopko stores and approximately $80 million will be invested over the next 12 months for the conversion of most of Pamida’s locations to the Shopko Hometown store concept and brand.

“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," Jones said. "We intend to be the leader in this category by combining the best of Shopko and Pamida in our aggressive new store growth plans.”

According to the release, the Shopko Hometown retail format combines pharmacy services with a broad and dynamic offering of strong national brands and high-value private label brands of apparel, toys, consumer electronics, seasonal items, and lawn and garden products — in store formats that range from 15,000 to 35,000 square feet.

Over the past two years, Shopko has purchased seven stores from Pamida and successfully transitioned them to the Shopko Hometown format. These locations have delivered an improved customer experience and have seen a significant increase in store traffic, sales and profitability, the release stated.

Once Pamida’s chain-wide conversions are complete, the company plans to accelerate the addition of new Shopko Hometown stores in the second half of 2012 and into 2013, Burns said.

Both companies are owned by affiliates of Sun Capital Partners, Inc. a private investment firm focused on leverage buyouts, equity, debt, and other investments in market-leading companies.

“This is an exciting move for Pamida, and the Shopko Hometown format will offer our customers an even better retail experience and a new and differentiated product offering that is not currently available in the smaller communities we serve,” said Harlow.

E-mail: jlee@desnews.com Twitter: JasenLee1

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