Dive Brief:
- McKesson Corporation, a pharmaceutical drug supplier, alleges that Shopko made “written misrepresentations regarding its solvency and its ability to pay for pharmaceuticals” and would not pay McKesson for products Shopko received, according to court documents obtained by Retail Dive.
- McKesson filed a request for a restraining order on Jan. 4 to prevent the retailer from selling its pharmaceuticals, but the Wisconsin-based Brown County Circuit Court denied the request, citing “significant community health issues,” if the order went through, according to court documents. An injunction hearing is scheduled for Jan. 24.
- Shopko, owned by private equity firm Sun Capital, was reported to be working on restructuring efforts in early December, when it was announced that the company is closing 39 stores. Sun Capital declined to comment to Retail Dive. Shopko did not respond to requests for comment. In December the company revealed that Kroger was buying pharmacy records from 42 Shopko locations.
Dive Insight:
In its complaint, McKesson alleges that Shopko representatives stated that the company expected to obtain $100 million from the sale of its pharmacy operations to Kroger, Hy-Vee and other chains, yet informed McKesson on Dec. 31, 2018, that Shopko decided it would not pay the company for pharmaceuticals that Shopko had received and “would not commit to any future date on which Shopko would be able to make payment.” McKesson additionally alleges that the retailer has stopped paying other creditors.
“We spent weeks attempting to work with Shopko’s senior leadership on repayment, while continuing to deliver medicine without receiving payment. Unfortunately, we were unable to reach a sustainable, long-term solution,” stated a representative from McKesson in an email to Retail Dive. Shopko stores tend to be located in rural areas and are therefore the only access to a pharmacy for many consumers in those regions.
In December, Debtwire reported that Shopko was going through a restructuring process. A representative from Shopko confirmed to Retail Dive that it planned to close 39 stores, and a list of those locations was reported by Fox 11 News.
Since that time several additional local media reports have surfaced about store closures, although it's not immediately clear if the stores were part of Fox 11's original list. Green Bay Press Gazette, for example, reported store liquidations in Appleton, Grafton, La Crosse, Menasha, Seymour and Sussex, Wisconsin; the Idaho Statesman reported a store closing in West Boise, Idaho; Daily Herald reported a location closing in Orem, Utah; The Arenac County Independent reported a location closing in Standish, Michigan; KSFY Television reported locations closing in Chamberlain and Custer, South Dakota; Vinton Newspapers reported a liquidation of the Vinton, Iowa location; KX News reported a Beulah, North Dakota closure; KTIV.com reported a closure in Estherville, Iowa; and The Olympian reported a store closure in Lacey, Washington. Retail Dive’s multiple attempts to confirm these closures with Shopko, as well as the original list of 39, have gone unanswered.
