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Slashing for Growth: Bankrupt Kmart Cuts 37K Jobs, 326 Units

NEW YORK — The bill for Kmart Corp.’s second, and perhaps final, round of post-bankruptcy reductions is in: 326 stores, 37,000 jobs and $1.7...

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James Adamson, Kmart Corp.

Photo By WWD Staff

NEW YORK — The bill for Kmart Corp.’s second, and perhaps final, round of post-bankruptcy reductions is in: 326 stores, 37,000 jobs and $1.7 billion.

That’s the latest from the bankrupt retailer about how many stores it will shutter as it proceeds, with exit financing in hand, speedily on a fast track to exit bankruptcy proceedings by April 30.

While some estimates of future closures ran as low as 250, Kmart’s announcement on Tuesday confirms a story that first ran in WWD Monday specifying the number of stores to be closed as "closer to 325." The company, which filed the largest Chapter 11 bankruptcy in retail history 51 weeks ago, said in the fall that it would likely close stores, but didn’t provide guidance on how many sites would be affected. Retail and real estate circles speculated that the affected store base would range from a low of 250 to as high as 600 sites. Kmart began notifying associates of its decision on Tuesday.

It wasn’t all bad news from Kmart, however. The Troy, Mich.-based discounter reported monthly results that were in the black for the first time since it filed Chapter 11 in a Chicago court last January. For the five weeks ended Jan. 1, Kmart posted income of $349 million on sales of $4.71 billion, a period that included sales from Thanksgiving Day and the holiday weekend. Comparable-store sales — for locations open at least a year — decreased 5.7 percent in the period.

James Adamson, chairman and chief executive officer, credited the Joe Boxer apparel brand, the new licensing agreement with Mexican singer Thalia and Kmart’s new store prototype as contributing to the improved results. There was no mention of Martha Stewart’s home merchandise in Kmart’s announcement.

Al Koch, chief financial officer, said during a conference call Tuesday that Kmart executives were "very encouraged by the company’s performance in light of what has been a very challenging environment nationwide and a weak retail environment."

The closures affect 266 Kmart and Big Kmart stores and 60 Kmart SuperCenters in 44 states and Puerto Rico, as well as a distribution center in Texas.

Following the closures, Kmart would operate a total store base count of 1,500 sites throughout the U.S., the Caribbean and Guam with a focus on being a "high-low" retailer. Fourteen stores in New York will be closed, including one in Queens and one in Brooklyn. Two in Manhattan, on 34th Street and at Astor Place, will remain open. The Astor Place site was on the list of possible sites to be closed that had been circulated among real estate circles late last year.
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