Kmart to close 284 stores

Discount retailer cuts 22,000 jobs

? Struggling to climb out of bankruptcy, Kmart Corp. is closing 284 U.S. stores and 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, including two in Kansas, and in such cities as Atlanta, Chicago, Cleveland, Dallas, Los Angeles, Miami, Oklahoma City, Nashville and Phoenix.

Kmart Corp. will close 284 stores, including two in Kansas, affecting about 22,000 positions, as part of its restructuring under Chapter 11 bankruptcy. The No. 3 discount retailer announced Friday that this store in Novi, Mich., would be part of the closures.

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.

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.

Kmart expects to record a charge of $1.1 billion to $1.3 billion as a result of the closings and job cuts.

Kmart stock closed up 5 cents at $1.29 in trading Friday on the New York Stock Exchange.