DETROIT (AP) – Kmart Corp. will close 326 stores and cut 30,000 to 35,000 jobs in the latest effort to emerge from Chapter 11 bankruptcy protection by the end of April and return to profitability. The Troy-based discount chain that pioneered the blue-light special and mass-marketed Martha Stewart home fashions will still have some 1,500 stores and nearly 200,000 employees if the cutbacks are approved by a federal bankruptcy judge. But it will come out of bankruptcy one-third smaller than it was when it went in.
Yesterday’s announcement marks the second round of closings in less than a year. Last March, Kmart closed 283 stores, affecting 22,000 jobs.
Wal-Mart Stores Inc. operates more than 2,800 stores in the United States and 52 in Puerto Rico. Target Corp. has 1,148 stores in 47 states.
The closings, which also include one distribution center in Texas, are in 44 states and Puerto Rico. Alaska will become the only state in the U.S. without a Kmart store when the five stores there close. In Texas, the closings leave 19 stores from more than 100 about a year ago. Other states with a large number of closures: Florida, with 25; California, 19; North Carolina, 18; Georgia and Ohio, 16 each; New York, 14; and Michigan, 13. Kmart is scheduled to appear in U.S. Bankruptcy Court in Chicago on Jan. 28. The company said it will submit its plan of reorganization to the court on Jan. 24. It plans to leave bankruptcy protection by April 30, months earlier than previously reported.
“We don’t want to remain in bankruptcy a day longer than necessary,” chief executive James Adamson said in a conference call with reporters.
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. The move also will enhance the company’s cash flow by about $500 million in 2003. The stores will close roughly 60 days after court approval.
Kmart also said it has lined up $2 billion in financing for after it leaves Chapter 11.
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 yesterday that her store is one of those closing. “It’s kind of a tremendous loss to me.”
The Detroit Kmart store slated for closure is one of just two in the city.