Baldwin Points to ShopKo as a Warning to Kohl’s Not to Sell Out to Vulture Capitalism

Senator urges department store chain to avoid private equity firms that would benefit from steering it toward a lucrative bankruptcy.

Bringing up a painful chapter in Wisconsin business history, Sen. Tammy Baldwin urged one Wisconsin-based department store chain, Kohl’s, not to follow in the tracks of another one, ShopKo, which went out of business two years ago this month after being set up for bankruptcy by a private equity firm.

In a letter to the Kohl’s board of directors, Baldwin noted they are weighing several offers for the Menomonee Falls firm with approximately 1,100 stores in 49 states. She asked company leaders to consider the long-term health of the company rather than short-term gains that could come to a buyer through selling off assets, taking on debt, or increasing shareholder payouts at the expense of workers in Wisconsin and elsewhere. 

Recalling ShopKo, Baldwin reminded the board how the private equity firm Sun Capital Partners took control of the stores and over a period of years “loaded the company up with debt, sold off its real-estate and refused to make any reinvestments—all while the firm paid itself millions in dividends and management fees.”

“ShopKo’s roughly 3,000 employees in Wisconsin lost their jobs,” she wrote. “Many were promised severance to incentivize them to work until the very end—only to find out that there were not enough funds remaining to pay them. Wisconsinites are rightly concerned that history will repeat itself at Kohl’s.”

The Wisconsin Democrat noted that the company has said it would take a path that “maximizes shareholder value,” when instead it should consider “the roughly 8,000 Kohl’s employees in Wisconsin and the dozens of communities across the state that are home to Kohl’s stores.”

Kohl’s counted 99,000 employees nationwide in 2021 including part-time seasonal workers.