13th St. Kmart to close; Wal-Mart may move

Published: Wednesday, January 15, 2003 at 6:01 a.m.
Last Modified: Wednesday, January 15, 2003 at 12:32 a.m.
The Kmart corporate restructuring plan announced on Tuesday has claimed two area stores, as the discount retailer's locations on NW 13th Street in Gainesville and U.S. 90 in Lake City are slated to close along with 324 other stores nationwide.
The corporation said it also is eliminating 37,000 jobs as part of a plan to get out of bankruptcy by the end of April. Michigan-based Kmart Corp. did not indicate when the stores would actually shut down, but it announced this second round of store closings as part of its effort to emerge from Chapter 11 bankruptcy proceedings.
Kmart's location just off Newberry Road in northwest Gainesville will remain open.
Robert Bryant, a store manager at the Kmart on NW 13th Street in Gainesville, confirmed that the store will close but declined to discuss additional details.
"I'm not at liberty to disclose anything else," Bryant said.
Lake City's Kmart also will shut down, store manager Tony Gullett said. He also referred all additional inquiries to Kmart's corporate headquarters.
It's not clear how many jobs will be lost at the two area stores as a result of the closings. In March 2002, Kmart shut down nearly 300 stores as part of the bankruptcy process, including its location on S. Ohio Avenue in Live Oak.
Corporate officials indicated that the stores targeted for closure included ones with unprofitable leases, low sales and locations where competition was high with other retail chains.
The Kmart on NW 13th Street in Gainesville, for example, is across the street from another retail store, Wal-Mart, the world's largest retail chain.
The Kmart chain that pioneered the blue-light special and introduced Martha Stewart styles to the masses still will have about 1,500 stores and 168,000 employees if the cutbacks are approved by a federal bankruptcy judge. But it will emerge from bankruptcy one-third smaller than it was when it went in.
"We don't want to remain in bankruptcy a day longer than necessary," chief executive James Adamson said.
The company filed for Chapter 11 protection from its creditors a year ago after failing to compete with Wal-Mart's low prices and Target's hipper merchandise. It closed 283 stores and cut 22,000 jobs last year but still lost more than $2 billion.
The latest round of closings affects stores in 44 states and Puerto Rico. Texas will lose 54 stores and a distribution center. Florida will lose 24 stores, California 19, North Carolina 18 and Georgia 16.
Kmart said the closings will result in a charge of $1.7 billion, most of which will be recorded in the fourth quarter of fiscal 2002.
Experts said the latest cutbacks may not be enough.
"I think they've got to get beyond lean and mean. They've got to get small, real small," said Anthony Sabino, associate professor of business at St. John's University.
Arun Jain, a marketing professor at the University at Buffalo School of Management, suggested Kmart needs to find some way of distinguishing itself from the competition.
"Wal-Mart and Target are going to rip them up," Jain said.
Since filing for bankruptcy, Kmart has seen declines in sales at stores open at least a year. Sales in November were down 17.2 percent from a year earlier, and December sales were off 5.7 percent.
Kmart is closing underperforming stores and those facing tough competition, and is also looking to shed unprofitable leases, which is easier while operating under bankruptcy.
The plan announced Tuesday to emerge from bankruptcy by April 30 is months earlier than previously reported.
The company plans to file its reorganization plan with the U.S. Bankruptcy Court in Chicago next week. A Jan. 28 hearing is set for the store closings.
Customer Ron Johnson, 51, said Kmart has no one but itself to blame.
Kmart has troubles beyond its business plan.
Just before its bankruptcy filing, Kmart began receiving letters, purporting to be from employees, that suggested wrongdoing at the company. The letters led to an investigation by the FBI and the Securities and Exchange Commission into the way Kmart was run under its former management.
Kmart stock lost 9 cents, closing at 17 cents a share Tuesday.
The Associated Press contributed to this report.

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