Kmart Corp. , battling intense competition from discount rivals Wal-Mart Stores Inc. and Target Corp. as well as talk of bankruptcy, is expected to close a large number of its 2,100 stores in a bid to revive its ailing retail business, analysts said Friday.

The Troy, Michigan-based retailer Thursday disclosed it was in talks with lenders about existing and supplemental financing after reporting weak holiday sales.

Kmart, the No. 2 discount chain behind Wal-Mart, also said it was reviewing its liquidity position and business plan for 2002 and 2003. The company is already in the midst of a massive restructuring aimed to make it more competitive with Wal-Mart.

"There will be a Kmart in some form or fashion, but it will not be a 2,000-store chain," Shelly Hale, retail analyst with Banc of America Securities, said.

Some analysts have identified about 250 to 300 unprofitable stores that would be likely targets for closure, but Hale said the actual number set for closure could be "significantly" higher.

"That's minimal," Hale said, referring to the number of stores that may be targeted for closure.

Kmart shares had already been hammered by comments made last week by Prudential Securities analyst Wayne Hood that the chain might file for bankruptcy.

The company reported on Thursday that sales at stores open at least a year fell 1.0 percent in December.

On Friday as uncertainty over the company's future swirled about, the stock sank to its lowest level in more than 30 years and was trading off $1.02, or more than 24 percent, at $3.18.

"It's rumor and speculation on store closings," Jack Ferry, a Kmart spokesman, said. "When we have any kind of announcement to make, we'll make it to the world."

Another analyst said she expects Kmart to announce "very soon" that it will close stores and slash capital spending.

"Kmart has long pointed out that 250 'opportunity' stores exist (worst performers) which we believe are most likely to be closed," Linda Kristiansen, retail analyst with UBS Warburg, wrote in a research note.

Kristiansen also estimated that Kmart's original $1.3 billion capital expenditure budget will be closer to $700 million in fiscal 2003.

Ladenburg Thalmann retail analyst Eric Beder also said on Friday he expects Kmart to soon announce "a material reduction in its store base."

Other major retailers that have closed stores in a bid to shore up sales and profits that flagged in the U.S. recession include Sears, Roebuck and Co , J.C. Penney Co. Inc. , Saks Inc. and Federated Department Stores Inc. .

In marked contrast, Wal-Mart has announced plans to open 50 new Wal-Mart discount stores and 180 to 185 Supercenters that sell general merchandise and groceries in the United States in fiscal 2002.