Liz Erk (lizerk) wrote,
Liz Erk
lizerk

  • Mood:

Poor Big K

I blame Martha and Rosie.

Martha went greedy and Rosie cut her hair into a sideways mullet and went Psycho-Dyke.

If only they followed Wal Mart's lead and used a simple yellow, noncontroversial smiley as its spokesperson...

Kmart closes 326 stores, 30,000-35,000 jobs to be cut
By Associated Press, 01/14/03

DETROIT -- Kmart Corp. said Tuesday it will close 326 stores and cut 30,000 to 35,000 jobs to cut costs as the company announced plans for a spring exit from bankruptcy.

The news came as Kmart, which filed for Chapter 11 protection nearly a year ago, reported another year of disappointing holiday sales as it continues to struggle against discount rivals Wal-Mart and Target.

The store closings are subject to court approval; Kmart is scheduled to appear in U.S. Bankruptcy Court in Chicago on Jan. 28. The Troy-based retailer currently operates roughly 1,830 stores and has about 228,000 employees.

Chief executive James Adamson said the company plans to emerge from bankruptcy by April 30.

"We don't want to remain in bankruptcy a day longer than necessary," he said in a conference call with reporters.

Tuesday's announcement marks the second round of closings in less than a year. Last March, Kmart closed 283 stores, affecting 22,000 jobs. After these closings, the retailer will be roughly one-third smaller than when it declared bankruptcy on Jan. 22, 2002.

The closings, which also include one distribution center in Texas, are in 44 states and Puerto Rico. They include 54 stores in Texas, 24 in Florida, 19 in California, 18 in North Carolina, 16 in Georgia and 13 in Michigan.

Stores to be closed in Massachusetts are in Boston, Haverhill, Plymouth, Raynham and Westfield.

Kmart filed for bankruptcy after a stock dive and disappointing 2001 holiday sales.

On Tuesday the retailer said December same-store sales, or sales at stores open at least a year, were down 5.7 percent from the same period in 2001.

Kmart needs to close stores while under bankruptcy protection to allow it to get out of leases. The stores targeted for closure include those with unprofitable leases, underperforming stores and those where competitive pressure is high.

"We're all upset. I've been here since 1998. I helped build this store up," said Sharon Knight, an employee at a Detroit Kmart who learned Tuesday that her store is one of those closing.

Knight, who works behind the jewelry counter, said employees were told at a meeting that the store is planning to close within 60 to 70 days.

Troy-based Kmart has struggled to compete with discount rivals Wal-Mart and Target. Some analysts have suggested there isn't room for Kmart unless it finds some way of distinguishing itself and luring customers.

Burt Flickinger, a retail analyst with Reach Marketing, says while store closings are necessary, the company isn't going about it the right way.

Kmart is basing its closures on performance over the last year "and should be looking at what the business will look like the next 12 months," Flickinger says.

Since Kmart filed for bankruptcy, it has lost an additional $2 billion and faces declines in same-store sales.

"As the company contracts, there's still no sign that it can make any money," Flickinger says. "There's so much uncertainty in what Kmart can do to solve its problems."

Jordan Kaplan, a professor of managerial science at Long Island University, said the store closings may buy Kmart some time.

"Hopefully it will stave off a complete liquidation of Kmart -- which of course is always a possibility," Kaplan said.

Other troubles plague the company beyond its business plan. Just before its bankruptcy filing, Kmart began receiving anonymous letters, purporting to be from employees, that suggested wrongdoing at the company.

The letters spawned an investigation into the way the company was run under its former management. Congress, the Justice Department and the Securities and Exchange Commission also are investigating Kmart's decline into bankruptcy.

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Detroit newswoman Liz Austin contributed to this report.

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On the Net:

http://www.kmart.com
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