Kmart Announces It Will Close 326 More Stores

Discussion
Jan 15, 2003
George Anderson

By George Anderson


Kmart announced Tuesday that it will close 326 stores in addition to the 283 it previously shuttered in its continuing effort to turn its business around.


The retailer also announced this action should enable it to emerge from bankruptcy protection in April, three months earlier than previously planned.


Kmart’s chairman and chief executive, James Adamson, believes the savings from the store closings and employee layoffs (estimated at 37,000 people) will ultimately help make the chain a “stronger and healthier company.”


Many in the financial community openly doubt Kmart’s chances of survival.


Count David Fick, managing director for real estate, Legg Mason is one of the unconvinced.


Mr. Fick told the Detroit Free Press, “We remain skeptical about Kmart’s ability to rebuild its business model sufficiently to compete with other large discounters such as Wal-Mart and Target for the long term and would be surprised if the company continues to operate a year from now.”


Jay Alix, founder of Questor Partners, a fund that invests in troubled companies, does not share the doubts expressed by so many others. Mr. Alix’s consulting firm, Alix Partners, counts Kmart among its clients. He predicts, Kmart will be the “comeback kid of retailing.”


In a separate, related announcement, Kmart said Tuesday that it had secured a commitment for up to $2 billion in exit financing from GE Commercial Finance, Fleet Retail Finance and Bank of America. The financing would be available to help the chain “meet its ongoing working capital needs, including borrowings for seasonal increases in inventory.”


For a complete list of Kmart store closings, go to the company web site, Kmart Corporation Releases List of Store Closings, http://www.kmartcorp.com/corp/story/pressrelease/news/pr030114a.stm


Moderator’s Comment: What is your reaction to the latest
Kmart news and your assessment of the retailer’s viability?


While it pales in comparison to the losses sustained earlier,
we would be remiss if we did not mention that Kmart posted its first profit
($349 million in December) since declaring bankruptcy.
[George
Anderson – Moderator
]

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