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

One apparel vendor selling to department stores and mass merchandisers, upon hearing the news of the store closures, was glad that Kmart would stay open, even though several hundred doors would shutter.

"Retail doors have been dropping like flies. Between the bankruptcies, some liquidations and store closures, it was beginning to look like maybe we wouldn’t have many more doors to sell to. Our accounts include names such as Stein Mart and Mervyn’s, but there’s not tremendous volume. The business is really centered on the production for orders from the mass discounters," the executive said.

As reported, Kmart’s lawyers questioned former president and chief operating officer Mark Schwartz earlier this month as part of the company’s stewardship review. Former chairman and chief executive officer Charles Conaway was questioned last year, and is expected to be contacted for a follow-up session later this month.

Chief restructuring officer Ron Hutchison said during the telephone conference that the disclosure statement would include information detailing the company’s stewardship review, which he said is "substantially completed."

Meanwhile, Kmart will provide transition assistance for affected associates, including severance, extended benefits and job placement assistance. Julian Day, president and chief operating officer, said during the conference call that associates are being encouraged to apply for re-employment at nearby Kmart stores.

Day said Kmart will embark on a marketing campaign to let customers know that Kmart remains "open for business."

Kmart also filed its amended annual report for 2001, or Form 10-K, with the Securities and Exchange Commission, as well as an amended quarterly report, or Form 10-Q, for the first two quarters for fiscal 2002. The restated filings reflect adjustments to correct past accounting practices.

The net impact of the restatements was to reduce reported operating results by $28 million in fiscal 2001, $24 million in fiscal 2000 and $39 million in fiscal 1999. The restatement also had the effect of reducing the retained earnings on the company balance sheet on Jan. 30, 1999, by $138 million.

Adamson said in a statement: "We have made considerable progress over the past year in attacking many of the systemic problems that have plagued Kmart’s performance for a long time. Clearly we continue to face many challenges — both within our organization and in a difficult economic environment that has not been kind to many retailers.