8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  August 18, 2005

SHOPKO STORES, INC.

(Exact name of registrant as specified in its charter)

Wisconsin	1-10876	41-0985054
(State or other jurisdiction of incorporation)	(Commission file number)	(IRS Employer Identification No.)

700 Pilgrim Way

Green Bay, Wisconsin 54304

(Address of principal executive offices)

Registrant’s telephone number, including area code: (920) 429-2211

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02

Results of Operations and Financial Condition.

On August 18, 2005, ShopKo Stores, Inc. issued a press release announcing its financial results for the quarter ended July 30, 2005.  A copy of the press release is attached hereto as Exhibit 99.1.

Item 9.01

Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Press Release dated August 18, 2005

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SHOPKO STORES, INC.

Date:  August 18, 2005

/s/ Peter G. Vandenhouten                            

Peter G. Vandenhouten

Assistant General Counsel and Secretary

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release dated August 18, 2005

EX-99.1

Exhibit 99.1

	NEWS RELEASE
	Contacts:
	Media – John Vigeland
	(920) 429-4132
	Investor Relations
	(920) 429-7039

SHOPKO REPORTS SECOND QUARTER RESULTS

GREEN BAY, Wis. (August 18, 2005)    ShopKo Stores, Inc. (NYSE: SKO), today announced financial results for the second quarter ended July 30, 2005.  Net income for the second quarter of 2005 was $11.5 million compared with net income of $8.3 million last year.  Earnings per diluted share were $0.38 compared with earnings per diluted share of $0.28 last year.  

Consolidated sales decreased 5.0 percent to $737.0 million in the second quarter of 2005 compared with $775.6 million for the comparable period last year.  Consolidated comparable store sales decreased 5.6 percent.  

The second quarter 2005 results benefited from a number of factors including:

·

continued  focus on improving the mix between profitable sales and promotional activity, resulting in higher gross margin

·

reduction in interest expense of $1.6 million due to lower debt levels

·

decrease of $1.7 million in expenses associated with reduced store remodeling activity in 2005 compared with a year ago

·

$2.3 million gain on the sale of three Colorado stores partially offset by $1.7 million of merger related costs.

Debt levels at period end declined $142 million from the comparable 2004 period due to reduced inventory levels and higher cash flows from operations, use of proceeds from the sale of the three Colorado stores, and reduced capital expenditures.

Capital expenditures for the second quarter of 2005 were $5.5 million compared with $21.0 million last year.  In the first half of fiscal 2005, capital expenditures were $8.3 million compared with $31.4 million for the same period last year.  The decrease in capital expenditures is primarily due to $13.0 million related to the expansion of the Omaha distribution center and $7.9 million in store remodeling activity during the first half of fiscal 2004.  The company expects capital expenditures to total approximately $35 million for the fiscal year.

During the second quarter of 2005, the Company sold three ShopKo stores in Colorado and closed two Pamida locations. The Company also announced the closing of one additional Pamida location to occur in the third quarter and expects to recognize a charge of $1.1 million upon the store closing.

First Half 2005

For the first half, consolidated sales were $1,440.2 million compared with $1,510.6 million last year, a decrease of 4.7 percent.  Net income was $12.2 million compared with last year’s net income of $5.9 million.  Diluted earnings per share were $0.40 compared with diluted earnings per share of $0.20 last year.

Due to the pending merger agreement pursuant to which ShopKo Stores, Inc. will be acquired by a private investment group affiliated with and managed by Goldner Hawn Johnson & Morrison Incorporated, a Minneapolis, Minnesota-based private equity firm, the Company has determined not to hold a conference call to discuss second quarter results.   The proposed merger agreement will be voted on by the company’s shareholders at a special meeting scheduled for September 14, 2005.  

ShopKo Stores, Inc. is a retailer of quality goods and services headquartered in Green Bay, Wis., with stores located throughout the Midwest, Mountain and Pacific Northwest regions.  Retail formats include 140 ShopKo stores, providing quality name-brand merchandise, great values, pharmacy and optical services in mid-sized to larger cities; 220 Pamida stores, 116 of which contain pharmacies, bringing value and convenience close to home in small, rural communities; and three ShopKo Express Rx stores, a new and convenient neighborhood drugstore concept.  With more than $3.0 billion in annual sales, ShopKo Stores, Inc. is listed on the New York Stock Exchange under the symbol SKO.  For more information about ShopKo, Pamida or ShopKo Express Rx, visit our Web site at www.shopko.com.

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding expected sales and other financial results.  Such statements are subject to important factors that could cause ShopKo's actual results to differ materially from those anticipated by the forward-looking statements including those referenced in ShopKo's current annual report on Form 10-K or as may be described from time to time in ShopKo's subsequent SEC filings; and such factors are incorporated by reference.

#####

Consolidated Sales Summary (dollars in millions)

Second Quarter

Business Segments	05/1/05- 07/30/05 (13 weeks)	05/02/04- 07/31/04 (13 weeks)	Change Total**	Change Comp* (13 weeks vs. 13 weeks)
ShopKo	$533.3	$568.8	(6.2)%	(6.7)%
Pamida	$203.7	206.8	(1.5)%	(2.7)%
Consolidated	$737.0	$775.6	(5.0)%	(5.6)%

*Comparable store sales represent sales of those stores open during both fiscal years and do not include sales from the ShopKo wholesale optical lab.

**ShopKo division total sales variance reflects sales from one closed ShopKo location in fiscal 2004 and three new ShopKo Express Rx locations.  Pamida division total sales variance reflects sales from five closed Pamida locations and seven new locations in fiscal 2004.  Pamida sales variance also reflects sales from three closed Pamida locations and three new locations in fiscal 2005.

ShopKo Stores, Inc. and Subsidiaries
Consolidated Statements of Operations
Second Quarter and Year-to-Date
		13 Weeks		13 Weeks		26 Weeks		26 Weeks
		Ended		Ended		Ended		Ended
		July 30,		July 31,		July 30,		July 31,
(In thousands, except per share data)		2005		2004		2005		2004
Revenues:
Net sales	$	736,995	$	775,576	$	1,440,254	$	1,510,609
Licensed department rentals and other income		3,499		3,254		6,959		6,349
		740,494		778,830		1,447,213		1,516,958
Costs and expenses:
Cost of sales		531,895		572,282		1,047,146		1,123,504
Gross margin		205,100		203,294		393,108		387,105
Selling, general and administrative expenses		162,205		163,208		324,398		323,946
Depreciation and amortization expenses		20,645		21,157		41,526		42,658
		182,850		184,365		365,924		366,604
Income from operations		25,749		22,183		34,143		26,850
Interest expense		7,002		8,577		14,363		17,145
Income before income taxes		18,747		13,606		19,780		9,705
Provision for income taxes		7,221		5,306		7,618		3,786
Net income	$	11,526	$	8,300	$	12,162	$	5,919
Net income per share of common stock:
Basic:	$	0.38	$	0.28	$	0.41	$	0.20
Diluted:	$	0.38	$	0.28	$	0.40	$	0.20
Weighted average number of common shares outstanding:
Basic:		30,075		29,291		29,901		29,251
Diluted:		30,433		29,514		30,238		29,491

ShopKo Stores, Inc. and Subsidiaries
Consolidated Statements of Operations
Percents of Sales
Second Quarter and Year-to-Date
	13 Weeks	13 Weeks	26 Weeks	26 Weeks
	Ended	Ended	Ended	Ended
	July 30,	July 31,	July 30,	July 31,
	2005	2004	2005	2004
Revenues:
Net sales	100.0	100.0	100.0	100.0
Licensed department rentals and other income	0.5	0.4	0.5	0.4
	100.5	100.4	100.5	100.4
Costs and expenses:
Cost of sales	72.2	73.8	72.7	74.4
Gross margin	27.8	26.2	27.3	25.6
Selling, general and administrative expenses	22.0	21.0	22.5	21.4
Depreciation and amortization expenses	2.8	2.7	2.9	2.8
	24.8	23.7	25.4	24.2
Income from operations	3.5	2.9	2.4	1.8
Interest expense	1.0	1.1	1.0	1.1
Income before income taxes	2.5	1.8	1.4	0.7
Provision for income taxes	1.0	0.7	0.5	0.3
Net income	1.5	1.1	0.9	0.4

ShopKo Stores, Inc. and Subsidiaries
Business Segment Information
Second Quarter and Year-to-Date
		13 Weeks		13 Weeks		26 Weeks		26 Weeks
		Ended		Ended		Ended		Ended
		July 30,		July 31,		July 30,		July 31,
(Dollars in thousands)		2005		2004		2005		2004
ShopKo Retail Segment
Net sales	$	533,257	$	568,801	$	1,051,108	$	1,121,600
Licensed department rentals and other income		3,018		2,903		5,993		5,667
		536,275		571,704		1,057,101		1,127,267
Costs and expenses:
Cost of sales		386,394		420,697		764,466		835,930
Gross Margin		146,863		148,104		286,642		285,670
Selling, general and administrative expenses		108,904		112,520		220,382		223,708
Depreciation and amortization expenses		15,401		15,173		30,997		30,470
		124,305		127,693		251,379		254,178
Income from operations	$	25,576	$	23,314	$	41,256	$	37,159
Pamida Retail Segment
Net sales	$	203,738	$	206,775	$	389,146	$	389,009
Licensed department rentals and other income		481		351		966		683
		204,219		207,126		390,112		389,692
Costs and expenses:
Cost of sales		145,500		151,585		282,680		287,574
Gross Margin		58,238		55,190		106,466		101,435
Selling, general and administrative expenses		44,106		43,543		87,638		86,500
Depreciation and amortization expenses		5,119		5,832		10,280		11,890
		49,225		49,375		97,918		98,390
Income from operations	$	9,494	$	6,166	$	9,514	$	3,728
Corporate Segment
Net sales	$	-	$	-	$	-	$	-
Licensed department rentals and other income		-		-		-		-
		-		-		-		-
Costs and expenses:
Selling, general and administrative expenses		9,196		7,147		16,378		13,738
Depreciation and amortization expenses		125		152		249		298
		9,321		7,299		16,627		14,036
Income from operations	$	(9,321)	$	(7,299)	$	(16,627)	$	(14,036)
Consolidated
Income from operations	$	25,749	$	22,181	$	34,143	$	26,851

ShopKo Stores, Inc. and Subsidiaries
Business Segment Information
Percents of Sales
Second Quarter and Year-to-Date
	13 Weeks	13 Weeks	26 Weeks	26 Weeks
	Ended	Ended	Ended	Ended
	July 30,	July 31,	July 30,	July 31,
	2005	2004	2005	2004
ShopKo Retail Segment
Net sales	100.0	100.0	100.0	100.0
Licensed department rentals and other income	0.6	0.5	0.6	0.5
	100.6	100.5	100.6	100.5
Costs and expenses:
Cost of sales	72.5	74.0	72.7	74.5
Gross Margin	27.5	26.0	27.3	25.5
Selling, general and administrative expenses	20.4	19.8	21.0	19.9
Depreciation and amortization expenses	2.9	2.7	2.9	2.7
	23.3	22.5	23.9	22.6
Income from operations	4.8	4.0	4.0	3.4
	13 Weeks	13 Weeks	26 Weeks	26 Weeks
	Ended	Ended	Ended	Ended
	July 30,	July 31,	July 30,	July 31,
	2005	2004	2005	2004
Pamida Retail Segment
Net sales	100.0	100.0	100.0	100.0
Licensed department rentals and other income	0.2	0.2	0.2	0.2
	100.2	100.2	100.2	100.2
Costs and expenses:
Cost of sales	71.4	73.3	72.6	73.9
Gross Margin	28.6	26.7	27.4	26.1
Selling, general and administrative expenses	21.6	21.1	22.5	22.2
Depreciation and amortization expenses	2.5	2.8	2.7	3.1
	24.1	23.9	25.2	25.3
Income from operations	4.7	3.0	2.4	1.0
Consolidated
Income from operations	3.5	2.9	2.4	1.8

ShopKo Stores, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(In thousands)
		July 30,		July 31,
		2005		2004
Cash and cash equivalents	$	41,431	$	32,819
Receivables, less allowances		52,079		51,714
Merchandise inventories		561,190		613,364
Other current assets		9,614		9,595
Total current assets		664,314		707,492
Other assets and deferred charges		8,788		7,697
Intangible assets		23,462		25,985
Net property and equipment		696,054		761,827
Total assets	$	1,392,618	$	1,503,001
Short-term debt	$	40,000	$	118,825
Accounts payable - trade		230,141		260,010
Accrued liabilities		173,582		174,692
Current portion of long-term obligations		7,177		62,473
Total current liabilities		450,900		616,000
Long-term obligations		234,767		242,876
Other long-term obligations		23,214		23,740
Deferred income taxes		22,963		22,803
Shareholders' equity		660,774		597,582
Total liabilities and shareholders' equity	$	1,392,618	$	1,503,001