- The Washington Times - Saturday, March 9, 2002

Kmart Corp. will close 284 stores across the country, including four in the Washington area, as part of the bankrupt retailer's plan to get out of the red.

The third-largest retailer behind Wal-Mart and Target, with more than 2,100 stores nationwide, will cut about 22,000 jobs, or about 9 percent of its 240,000-member work force.

"The decision to close these underperforming stores, which do not meet our financial requirements going forward, is an integral part of the company's reorganization effort," said Kmart Chief Executive Charles C. Conaway. "We are confident that doing so will provide the company with a healthier, more productive store base."

Locally, Kmart will close its locations in Laurel, Forestville, Columbia, Md., and Burke, laying off approximately 285 employees. A total of 13 stores are closing in Maryland and Virginia.

The Troy, Mich-based retailer, which had amassed more than $10 billion in debt, filed for Chapter 11 bankruptcy protection in January after a disappointing holiday season.

The stores that have been chosen to close will remain open pending approval by the bankruptcy court at a hearing March 20. If the court approves, the stores will begin their going-out-of-business sales which last usually 60 to 90 days, said Mary Lorencz, a Kmart spokeswoman.

The closings will have an effect on more than just Kmart and its associates, especially if they are located in strip shopping centers.

"If Kmart is the anchor store, that's going to be a blow [to the other stores in the center]," said Thomas Saquella, president of the Maryland Retailers Association. "Kmart's advertising and their presence drew a lot of customers."

However, the free space may provide opportunites for retailers like Target and Kohl's to move into areas where they don't already have stores, Mr. Saquella said.

As for new Kmart stores being built including the 120,000-square-foot store under construction at the Brentwood impound lot in the District all new construction is subject to approval by the bankruptcy court, Miss Lorencz said.

Meanwhile, construction of the D.C. Kmart is continuing and the store "will eventually open," she said.

Kmart said it anticipates that income generated from store closings and related cost savings will be about $550 million in 2002 and about $45 million annually after that.

The company expects to record a charge in the range of $1.1 billion to $1.3 billion as a result of the closings and job cuts, but the closings are expected to improve its earnings before interest, taxes and depreciation by about $31 million a year.

Earlier this week, the bankruptcy court approved $2 billion in additional financing for Kmart, plus up to $150 million in bonuses for employees who help the company get back on track.

Shares of Kmart on the New York Stock Exchange rose yesterday to $1.29 an 84 percent increase from a 70-cent low on Jan. 22, the day Kmart filed for bankruptcy. Over the last year, the stock has dropped nearly 87 percent.


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