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House in order, ShopKo updates and remodels

Andrea Lillo -- Home Textiles Today, June 16, 2003

After reducing its debt by $381 million over the past two years, ShopKo is now turning its attention to updating its stores, including 11 just-completed Pamida remodelled prototypes and plans for two ShopKo prototypes this fall.

"We've gone from investing in debt reduction to investing for growth," said Sam Duncan, president and ceo, at the U.S. Bancorp Piper Jaffray consumer conference held here last week.

This year's capital expenditures will total $80 million — more than 150 percent higher than the allotment for 2002 — one-quarter of which is slated for remodels, decor and a pharmacy investment. Another 25 percent is earmarked for technology improvements.

ShopKo has not opened a new store in three years, and the company is testing or will test new prototypes for both divisions, which "will tell us a lot and whether we are on the right track."

"We've created the ability for ourselves to invest at a higher rate," said Jeff Girard, vice chairman, administration and finance.

The ShopKo prototypes, the first two located in Ashwaubenon and Neenah, WI, will get a cleansing indoors and out, starting with a new warm color palette of tans, browns and light greens to replace the current "tired" colors. Inside, departments will have a cleaner, updated look. Executives said that ShopKo could begin store expansion in early 2004, with special focus on the Midwest.

In the remodelled stores, "home decor will have a strong emphasis," said Duncan, and areas such as RTA furniture are expanding.

In addition, ShopKo is reviewing its private label program and is testing self-checkouts in two stores.

Pamida's main competition is the dollar stores since it has little overlap with the major discounters in its core rural markets. The real performance measurement for the 11 remodelled Pamidas, completed in May, will be evident in the fourth quarter. ShopKo will release results after Christmas, executives said.

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