Kmart revamp almost complete
By Alexandra R. Moses
Associated Press Writer
DETROIT — Kmart Corp. announced Tuesday that it is closing 326 more stores and eliminating 37,000 more jobs as part of a plan to get out of bankruptcy by the end of April, but Hawaii's profitable stores will remain open.
The discount chain that pioneered the blue-light special and introduced Martha Stewart styles to the masses will still have some 1,500 stores and 168,000 employees if the cutbacks are approved by a federal bankruptcy judge. But it will emerge from bankruptcy one-third smaller than it was when it went in.
"We don't want to remain in bankruptcy a day longer than necessary," chief executive James Adamson said.
Kmart filed for Chapter 11 protection from its creditors a year ago after failing to compete with Wal-Mart's low prices and Target's hipper merchandise. It closed 283 stores and cut 22,000 jobs last year but still lost more than $2 billion.
The latest round of closings affects stores in 44 states and Puerto Rico. Texas will lose 54 stores and a distribution center. Florida will lose 24 stores, California 19, North Carolina 18 and Georgia 16.
Kmart currently operates seven stores in the islands — four on Oahu; one in Kahului, Maui; one in Lihue, Kauai; and one in Kailua-Kona on the Big Island — none of which were on a list of stores closing released by the company on Tuesday.
"It was based on financial performance and the Hawaii stores were performing well," said Michele Jasukaitis, a spokeswoman at Kmart's corporate headquarters. "So they're profitable stores and therefore will remain open."
Kmart said the closings will result in a charge of $1.7 billion, most of which will be recorded in the fourth quarter of fiscal 2002.
"We're all upset. I've been here since 1998. I helped build this store up," employee Sharon Knight said after learning her Detroit Kmart was one of 13 in Michigan that will be closed. "It's kind of a tremendous loss to me."
Knight, who works behind the jewelry counter, said employees were told the store will close in 60 to 70 days.
Experts said the latest cutbacks may not be enough.
"I think they've got to get beyond lean and mean. They've got to get small, real small," said Anthony Sabino, associate professor of business at St. John's University.
Arun Jain, a marketing professor at the University at Buffalo School of Management, suggested Kmart needs to find some way of distinguishing itself from the competition.
"Wal-Mart and Target are going to rip them up," Jain said.
Since filing for bankruptcy, Kmart has seen declines in sales at stores open at least a year. Sales in November were down 17.2 percent from a year earlier, and December sales were off 5.7 percent.
Kmart is closing underperforming stores and those facing tough competition, and is also looking to shed unprofitable leases, which is easier while operating under bankruptcy.
The plan announced Tuesday to emerge from bankruptcy by April 30 is months earlier than previously reported.
The company plans to file its reorganization plan with the U.S. Bankruptcy Court in Chicago next week. A Jan. 28 hearing is planned for the store closings.
Customer Ron Johnson, 51, said Kmart has no one but itself to blame.
"Kmart just got fat and lazy, that's all I can say," Johnson said as he shopped at a Detroit-area Kmart. "They had this town, they had this state and I think due to taking it for granted, they lost it."
Kmart has troubles beyond its business plan.
Just before its bankruptcy filing, Kmart began receiving letters, purporting to be from employees, that suggested wrongdoing at the company. The letters led to an investigation by the FBI and the Securities and Exchange Commission into the way Kmart was run under its former management.
Kmart stock lost 9 cents, closing at 17 cents a share Tuesday.
