Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, September 9, 1994 TAG: 9409090061
SECTION: BUSINESS PAGE: B-4 EDITION: METRO
SOURCE: Associated Press
DATELINE: DETROIT LENGTH: Medium
- The troubled Kmart Corp. said Thursday it is closing 110 stores in 31 states and eliminating 6,000 jobs as part of a restructuring plan to counter intense competition in the retail business.
Investors pushed Kmart stock higher, welcoming the move to close stores that aren't making enough money so the company can concentrate on expanding in more promising areas.
The only Virginia store affected is in Petersburg. A store in Eden, N.C., near Western Virginia, will close. The closings, affecting 4.7 percent of Kmart's 2,350 discount stores, are to be completed by February.
It's a steep retrenchment for Kmart, whose blue-light specials dominated suburban mini-malls but have been eclipsed by Wal-Mart's aggressive moves into rural areas.
``Much remains to be done. But we are making considerable progress with initiatives to strengthen the core Kmart discount business and enhance the profitability of Kmart Corporation,'' Kmart Chairman Joseph E. Antonini said.
Also Thursday, Kmart replaced the head of its expanding Super Kmart division with grocery executive Ronald J. Floto.
Super Kmart Centers put traditional Kmart offerings and a supermarket under one roof. There are 44 Super Kmarts and the company plans to open another 26 by year's end.
``It's a tough decision for the company to make,'' said Walter Loeb, a retail analyst and consultant in New York. ``Will they catch up to Wal-Mart? I don't think so. Will they be a discount store in their own right? I think they can.''
Kmart's stock finished 50 cents per share higher on the New York Stock Exchange on Thursday at $18.
The job cuts include 10 percent of the company's managers. Those cuts - a total of 2,300 jobs - will be made over two years, including 650 store managers who will lose their jobs immediately as a result of the store closings. Kmart employs about 260,000 people worldwide.
``It's a very emotional time for us,'' said Jim Phillips, manager at the Kmart in Norfolk, Neb., one of four to close in the state. ``You can just imagine the reaction. It just came out of the blue.''
In 1990, Kmart began a six-year, $3 billion plan to relocate some stores, modernize others and close 150 outlets. Old, cramped stores were to be traded for larger, gleaming successors with wider aisles and higher-quality, more upscale merchandise.
That process is expected to be about 65 percent complete by January.
Kmart lost $974 million last year partly because of pricing pressure, but mostly to set aside money for its restructuring. In the most recent quarter, Kmart's profits were off nearly 8 percent.
by CNB