Kmart To Close 284 Stores In 40 States, Including 10 In Ohio - Cleveland 19 News Cleveland, OH

Kmart To Close 284 Stores In 40 States, Including 10 In Ohio

By ALEXANDRA R. MOSES, Associated Press Writer

DETROIT (AP) - Struggling to climb out of bankruptcy, Kmart Corp. is closing 284 U.S. stores in 40 states, including 10 in Ohio, and eliminating 22,000 jobs in what could be a devastating blow to many shopping centers around the country.

Stores to be closed in Ohio are in Ashland, Bowling Green, Cleveland, Columbus, Hamilton, Macedonia, Maple Heights, New Philadelphia and Tiffin. Ohio had 114 Kmarts before the cutbacks.

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.

About 915 of the more than 13,400 Kmart jobs in Ohio will be eliminated.

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.

Shoppers at the New Philadelphia store said the will lose a favorite spot to find good deals.

Helen Watson, of Mineral City, said, "I love this store. I can always find tops and clothes I like and all different kinds of specials. So I really hate to see it go out. We need this store."

Gina Edie, of Zoarville, said she will have to travel to Canton of shop at Kmart.

"I'm going to have to go out of the area to shop, obviously. The tax base is going to lose my money because I'm going elsewhere to find what I want."

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 set 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.

In many locations, Kmart was the anchor store for a strip mall, responsible for bringing in much of that mall's business.

"The other tenants are concerned about viability," said Martin Zohn, a bankruptcy lawyer with Proskauer Rose LLP. "The center loses most of its attraction to consumers, so even if there is a replacement tenant eventually, there's a long period of a boarded-up store."

"It is going to impact us big-time," said Laurel Perga, who owns a Billings, Mont., hair salon near the only Kmart to be closed in that state. "We do have loyal customers who will come regardless. But to build a new clientele, or to grow, that will make it more difficult."

It is also likely Kmart will stop advertising in local newspapers in nine communities -- including Cumberland, Md., Benton Harbor, Mich., and Victoria, Texas -- where the only Kmart in the area will close, Kmart spokesman Abigail Jacobs said.

George Griffin, assistant general manager of the Cumberland Times-News in western Maryland, estimated the newspaper will lose 2 percent of its annual profit when Kmart pulls its glossy circulars from the paper.

"We're in a dying market -- our population is decreasing -- so there are not a lot of ways to make it up," he said.

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.

The stores to be closed include 33 in Texas, 21 in Illinois and 16 each in California and Florida. One store will close in Puerto Rico.

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

In Friday afternoon trading on the New York Stock Exchange, Kmart stock was up 6 cents at $1.30.

(Copyright 2002 by The Associated Press. All Rights Reserved.)

Powered by Frankly