Kmart to Close 284 Stores8 Mar, 2002 By: Hive News
Kmart today announced that it intends to close 284 under-performing stores as part of its initial Chapter 11 financial objectives review. The closings will result in 22,000 associate position layoffs, the company said.
The stores to be closed include 271 Kmart discount stores and 12 Kmart Supercenter retail outlets in 40 states, and 1 Kmart store in Puerto Rico.
The stores will remain open for business pending approval of thestore-closing plan by the Bankruptcy Court for the Northern District of Illinois and until the related store-closing inventory sales arecompleted on a store-by-store basis.
Kmart announced it anticipates the sales generated from store closings and related cost savings will enhance cash flow by approximately $550 million in 2002 and approximately $45 million annually thereafter. In addition, the chain announced the closing of the locations was expected to improve the Company's earnings before interest, taxes and depreciation (EBITDA) by approximately $31 million annually.
As a result of these store closings, Kmart expects to record a charge in the range of $1.1 billion to $1.3 billion.
CEO Charles C. Conaway said in a statement, "The decision toclose these underperforming stores, which do not meet our financialrequirements going forward, is an integral part of the Company'sreorganization effort. We are confident that doing so will provide the company with a healthier, more productive store base. 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. We want to thank all of our associates for their dedication and outstanding contribution and will make every effort to ease the transition for those associates who are displaced."
The company said that a list of the stores slated to be closed will bereleased on PR Newswire at 11 a.m. and posted to ww.bluelight.com under Kmart News later today.
Kmart said it has asked the bankruptcy court to give final approval to the store-closing plan at a hearing in Chicago March 20. On March 6, the Court approved the company's bid procedures, notice procedures and other matters in connection with the store-closing plan.