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ShopKo and Pamida to merge

ShopKo is now part of an expanded chain of stores, but not much else should change for this store in River Falls. Phil Pfuehler photo

Two of the nation's leading Midwest-based general merchandise retail chains, ShopKo Stores and Pamida, said they will merge to create one of the largest U.S. retail chains focused on serving smaller and rural communities. River Falls is the site of one of the 149 Shopkos located in 13 states.

According to a news release, the merged chain will have nearly 350 stores in 22 states with plans for more store growth coming later in 2012.

Shopko's annual revenues are said to be $2 billion. Omaha, Neb.-based Pamida's revenues are estimated at roughly $1 billion.

The combined company, which will be headquartered in Green Bay, will use the Shopko name and 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. About $80 million will be invested over the next 12 months in the conversion of most Pamida locations to the Shopko Hometown store concept and brand.

"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."

Over the past two years, Shopko has bought 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, affirming the potential of the merger.

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.

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

ShopKo was founded in 1962 and headquartered in Green Bay. A ShopKo opened in River Falls in 1994.

Pamida was founded in 1963. A Pamida store opened in Ellsworth 3 1/2 years ago but was downsized last August to a "pharmacy-plus" service store. Another Pamida store that was located in New Richmond closed several years ago shortly after Walmart opened in the community.