If you’ve read some of my blog posts over the past year or so, you’ve sensed a lament of retail fashion and department store outlets succumbing to the pressures of nimble competition and owners who want to make a profit on their investment. It doesn’t matter whether it’s selling clothes or toys, whether they catered to a younger or older crowd, or even if they were prominent in online sales. If a store closes up shop, it leaves an empty space in your nearby mall/plaza/whatever, creates queasiness in city and mall managers, and definitely leaves a big pit in an avid shopper’s heart.
Unfortunately, what’s been a leading reason for these stores/chains shuttering is bankruptcy. It’s been happening with Shopko, which declared Chapter 11 in late January and has announced more than several store closures since then, including their last 3 locations here in the Madison area. For Shopko, not only is their misfortune the result of withering competition, it also involves keeping lining further the pockets of their
vulture private equity owners. At the beginning of this month, it was revealed that Shopko had to borrow over $179 million from financial lenders to pay dividends and “consulting fees” to the investment firm that owns it. Some of that money — $13.5 million worth — could have gone to the State of Wisconsin in the form of taxes and other fees Shopko still owes the state. Yeah, that’s a lot of money, and who knows what Shopko’s fate could be right now if it went to where it should have gone (i.e. the taxman, employees, debtors) instead of the fat-cat owners who want only one thing: A quick return on their investment. Continue reading