Nevada Kmarts remain open
The SuperKmart store in North Carson City dodged the chopping block Friday in the company’s announced closure of 284 stores in 40 states, according to the company Web site.
Kmart Corp., which filed for Chapter 11 bankruptcy in January, will cut approximately 22,000 jobs as part of the restructuring effort.
In January, SuperKmart assistant manager Stan Ure said the Carson City branch posted strong financial performances, insulating it from the prospect of closure. At the time, he said the local store is one of the best in the chain.
None of the chain’s Nevada stores will close.
Struggling to climb out of bankruptcy, Kmart Corp. is eliminating 22,000 jobs in what could be a devastating blow to many shopping centers around the country.
The stores to be closed are in 40 states and in such cities as Atlanta, Chicago, Cleveland, Dallas, Los Angeles, Miami, Oklahoma City, Nashville and Phoenix.
Kmart, the nation’s No. 3 discount chain after Wal-Mart and Target, operates more than 2,100 stores nationwide. The job cuts announced Friday amount to nearly 9 percent of its work force of about 250,000.
Kmart, which gave America the blue-light special and Martha Stewart fashions at cut-rate prices, filed for Chapter 11 bankruptcy Jan. 22 after being unable to compete with Wal-Mart’s low prices or Target’s flashier fashions.
Chuck Conaway, Kmart chief executive, said the closings are central to the company’s effort to get out of Chapter 11. The closings could take place 60 to 90 days after the plan gets bankruptcy court approval, Kmart said. A hearing is set for March 20.
“While the business rationale supporting this action is compelling, we deeply regret the impact these store closings will have on our associates, our customers and the communities where these stores are located,” Conaway said.
Kmart said it expects the savings from the closings to be about $550 million in 2002 alone — money that could be used to revamp its other stores.
But for employees, shopping center owners and stores that share space with Kmart, the closings could be devastating. In communities where the closings mean no nearby Kmart, local newspapers that counted on Kmart’s heavy spending on advertising could also get hurt.
Linda Muhammad, an employee at an Atlanta Kmart slated to close, said she liked working for the store and hoped to get a job at another store.
Kmart spokesman Stephen Pagnani said affected employees can apply for openings at other Kmarts, but the company is not offering a severance package. Employees who stay on through the liquidation will get bonuses.
In many locations, Kmart was the anchor store for a strip mall, responsible for bringing in much of that mall’s business.
“The other tenants are concerned about viability,” said Martin Zohn, a bankruptcy lawyer with Proskauer Rose LLP. “The center loses most of its attraction to consumers, so even if there is a replacement tenant eventually, there’s a long period of a boarded-up store.”
“It is going to impact us big-time, I think,” said Laurel Perga, who owns a Billings, Mont., hair salon near the only Kmart to be closed in that state. “We do have loyal customers who will come regardless. But to build a new clientele, or to grow, that will make it more difficult.”
It is also likely Kmart will stop advertising in local newspapers in nine communities — including Cumberland, Md., Benton Harbor, Mich., and Victoria, Texas — where the only Kmart in the area will close, Kmart spokesman Abigail Jacobs said.
George Griffin, assistant general manager of the Cumberland Times-News in western Maryland, estimated the newspaper will lose 2 percent of its annual profit when Kmart pulls its glossy circulars from the paper.
“We’re in a dying market — our population is decreasing — so there are not a lot of ways to make it up,” he said.
The layoffs are the biggest in the retail industry since Montgomery Ward closed down and put 28,000 employees out of work in December 2000.
The stores to be closed include 33 in Texas, 21 in Illinois and 16 each in California and Florida. One store will close in Puerto Rico.
Kmart expects to record a charge of $1.1 billion to $1.3 billion as a result of the closings and job cuts.
In Friday afternoon trading on the New York Stock Exchange, Kmart stock was up 6 cents at $1.30.
On the Net:
Kmart Corp.: http://www.kmartcorp.com