Kmart to issue 'hit' list by the Ides of March

By Jeff St. Onge
Bloomberg News Service

CHICAGO — Kmart Corp. told a bankruptcy judge that in the next three weeks, it will list which of its stores will close as part of its Chapter 11 reorganization.

The discount retailer, which has 2,100 stores, asked U.S. Bankruptcy Judge Susan Pierson Sonderby for permission to hire an auctioneer to help liquidate merchandise in the locations it plans to shutter.

It said the list of stores to be closed would be filed "on a confidential basis with this court no later than March 11."

Troy, Mich.-based Kmart, the largest retailer ever to file for Chapter 11, had told creditors at a meeting last month that the targeted stores would be identified at a March 20 hearing.

Analysts have said Kmart may shutter more than 500 of its stores. The company has said it plans to come out of bankruptcy in July 2003.

"Prompt execution of the store-closing sales at this time is critical, given that the first quarter is historically a time of significant cash drain," the company said in papers filed Friday in U.S. Bankruptcy Court in Chicago.

Store-closing sales will last for several weeks and end sometime this summer, Kmart said in the filing. Abacus Advisory & Consulting Corp. is advising Kmart in connection with the store closings.

"Selection of the closing stores will be complete soon," the company said.

Kmart has seven stores in Hawai'i.

If the store closings don't happen quickly, losses due to theft will increase and "merchandise will grow stale and its realizable value diminish," Kmart said.

Kmart, the No. 3 U.S. discount retailer behind Wal-Mart Stores Inc. and No. 2 Target Corp., reported $16.3 billion in assets and $10.3 billion in debt in Chapter 11 papers filed Jan. 22.

Shares of Kmart, with $37 billion in 2001 sales, rose 4 cents to $1.03.