Kmart will keep Hawai'i stores
Advertiser Staff and News Services
Kmart Corp. said yesterday its seven Hawai'i locations are not among the 284 stores it plans to close as part of its restructuring under Chapter 11 bankruptcy.
Advertiser library photo • February 2002
The stores to be closed include 271 Kmart discount stores and 12 Kmart Supercenters in 40 states and one Kmart store in Puerto Rico. The company is also cutting about 22,000 jobs.
Kmart operates four stores on O'ahu in Kapolei, Waikele, Iwilei and 'Aiea. The others are in Kona on the Big Island; Lihu'e, Kaua'i; and Kahului, Maui.
Kmart, the nation's third biggest discount retailer after Wal-Mart and Target, operates more than 2,100 stores nationwide. The job cuts amount to just under 9 percent of its work force of about 250,000.
"The decision to close these underperforming stores, which do not meet our financial requirements going forward, is an integral part of the company's reorganization effort," said chief executive Chuck Conaway.
In Hawai'i, Kmart operates four stores on O'ahu in Kapolei, Waikele, Iwilei and 'Aiea. The others are in Kona on the Big Island; Lihu'e, Kaua'i; and Kahului, Maui.
Kmart is also planning to build a Super Kmart Center in Honolulu near Ala Moana Center. The retailer last month extended a contract to buy about 10 acres known as the "Ke'eaumoku superblock" and said it remains hopeful it can proceed with the project despite its financial troubles.
Financing the estimated $50 million project is an issue for the retailer, though local developer Duncan MacNaughton, who is acting as project developer, has said he is confident the retailer will be able to proceed with the store.
The store closures by Kmart in other parts of the country could be a severe blow to many shopping centers that depend on the discount retailer to attract crowds that can help other businesses. Stores will close in 40 states, including 33 locations in Texas, 21 in Illinois and 16 each in California and Florida.
The closing stores were picked on the basis of several criteria, including profitability, age and the amount of local competition, Kmart said. Stores will close in mainly rural and suburban areas, but some urban stores also will close.
The layoffs, which are expected to show up in the nation's unemployment data in the third and fourth quarters, are the third largest in the retail industry since Sears, Roebuck & Co. laid off 50,000 workers in January 1993, according to Challenger, Gray & Christmas, a national job placement firm that also tracks employment data. Montgomery Ward laid off 28,000 workers when it announced it was closing its business in December 2000.
Kmart's liquidation process will take 60-90 days, pending bankruptcy approval. The court is to take up the closings at a March 20 hearing. The closing stores will remain open pending bankruptcy court approval.
Some experts say that the stores to close were unprofitable and landlords and other tenants might be relieved to hear yesterday's news.
"There might be landlords who are saying 'OK, now I can get a really solid anchor in there,' " said Howard Nemiroff, a finance professor at Long Island University. "I suspect the perimeter businesses are going to like that."
Some of the cities where there will be closings are Phoenix, Atlanta, Los Angeles, Miami, Chicago, Cleveland, Oklahoma City, Nashville, Dallas and Richmond, Va.
In nine communities — including Cumberland, Md.; Benton Harbor, Mich.; and Victoria, Texas — the store shutdown means the loss of the only Kmart in the area, company spokesman Abigail Jacobs said.
Analysts had predicted between 250 and 700 closings.
Several analysts said they expect Kmart will do another round of closings after it comes up with a strategic plan.
"I think they put themselves under pressure to announce store closings early," said Conor Reilly, senior partner in Gibson, Dunn & Crutcher's office in New York.
