TROY, Mich. – Kmart Corp. told key creditors and vendors that it expects to announce by next month which of its stores it wants to close as part of its turnaround effort.
The company's bankruptcy lawyer, John W. Butler Jr., detailed the Troy-based discount retailer's plan to return to financial health by July 2003 at a meeting Thursday in Chicago.
Kmart hopes to tell the bankruptcy court which poorly performing stores it wants to close at a March 20 hearing, Butler said. Kmart has not said how many of its more than 2,100 stores it will close, but analysts speculate it will be in the hundreds.
Butler said he wanted creditors and vendors to know Kmart is moving quickly to close stores that aren't making enough money, cut other costs and cement relationships with its most important suppliers.
At a March 6 hearing, Butler said Kmart will tell the court it wants to continue contracts that put popular name-brand merchandise such as Martha Stewart, Disney and Joe Boxer on its shelves, the Detroit Free Press reported.
Butler also said Kmart is asking suppliers to ship goods without demanding cash payments in advance or on delivery, The Detroit News reported. The term of Kmart's $2 billion credit line is 27 months, covering the retailer beyond its July 2003 target date for exiting Chapter 11.
The nation's third-largest discount retailer filed for Chapter 11 bankruptcy protection last month following lower-than-expected holiday sales and fourth-quarter earnings, downgrades by credit-rating agencies and a stock dive.
Two committees were named by U.S. Trustee Ira Bodenstein to represent creditors in Kmart's bankruptcy reorganization. The creditors committees - one representing five financial institutions, the other representing 13 general creditors, mostly suppliers - will negotiate Kmart's restructuring plan and how it will pay its bills.
Butler also said Kmart was moving now to get out of 270 leases for empty properties and other lease obligations, and cutting $350 million a year through staff reductions unrelated to store closings and office consolidations.
Chuck Conaway, Kmart's chief executive, who also was at the meeting, said he would be talking with store employees about the company's plans. The first meeting was Wednesday in a Chicago suburb, and he expects to speak in most of the major markets in the next six to eight months.