NEW YORK – Kmart Corp. Chairman James Adamson said on Tuesday the bankrupt retailer will unveil its store closure plan on March 11, but dismissed some analyst forecasts that at least 500 stores would be shuttered.
Following a confetti-sprinkled, morale-boosting introduction of a new line of children's clothing, Adamson said the company will start closing stores in early August and will decide them "purely on financials."
Analysts have estimated that Kmart would shutter anywhere from 500 to 700 stores out of a total of more than 2,100. Asked about the lower number, Adamson said, "That's too high."
Adamson said he hopes Kmart, which last month became the largest retailer ever to file for bankruptcy protection, will be have $35 billion in sales by next year, $2 billion below the level in fiscal 2001. The retailer will reveal its strategic plans later in August, he said.
Adamson, a corporate turnaround specialist who took the reins as chairman last month, said Kmart will eliminate or scale back merchandise categories with lackluster sales, but declined to name specific areas.
Shipments are "close to" its plan, with 80 percent of its shelves stocked, Adamson said. Some suppliers, including electronics vendors, have not resumed shipments to stores, he said.
"Everybody's kind of shellshocked," he said, referring to shareholders, employees and vendors reacting to the bankruptcy filing.
REACHING OUT TO URBAN MARKETS
In a retailing landscape increasingly ruled by leviathan Wal-Mart Stores Inc. , Kmart has struggled to find its niche. It has lost market share to both Wal-Mart and Target Corp. in recent years, as customers found rival stores better organized, better stocked and often with lower prices.
"We need to bring the focus back to Kmart," Adamson said. "Who are we? We're still trying to define that."
One way to overcome its identity crisis is by zeroing in on urban markets, he said. Black, Asian, Latino and American Indian shoppers account for 40 percent of sales.
Kmart also wants to draw in customers by bulking up on popular brands only available in its stores, including Martha Stewart housewares and linens. Adamson said Kmart plans to expand the line, but he declined to give details.
The Troy, Michigan-based retailer debuted an exclusive Disney Co. brand of children's clothing last month, targeting an older group than its Sesame Street apparel.
Kmart's vice president of apparel and jewelry, Lorna Nagler, said Kmart made the Disney deal because of its "great appeal" to customers across all ethnic backgrounds.
Adamson said Kmart is actively considering other license deals, but cautioned they would take time due to the bankruptcy proceedings.
Adamson said Kmart was exploring increased benefits and bonuses to employees, and has begun matching contributions to employee 401k retirement funds.
It was not immediately known how many jobs would be cut due to the coming store closures.
SHEDDING SCARLET LETTER
Kmart is the third company that Adamson has been hired to guide out of bankruptcy. A low-profile member of Kmart's board since 1996, he is credited with reviving the Denny's restaurant chain in the late 1990s after race discrimination lawsuits damaged its reputation.
Adamson said it would be more difficult to breathe life back into Kmart than it was at Denny's because of Kmart's enormity. "This is not a complicated bankruptcy. It's a big bankruptcy," he said.
He said that while Kmart lawyers have targeted next summer for emerging from Chapter 11, he wants it done sooner.
"Our people are aware of the scarlet letter of Chapter 11, and we'd like to get that removed as soon as possible," he said. "Every day, it hurts this company."
Shares of Kmart, which have plunged 88 percent over the past year, closed off a penny to $1.13 Tuesday on the New York Stock Exchange.