Kmart Corp. Files Bankruptcy, Plans to Cut Number of StoresBy Elizabeth Sanger
NEWSDAY -- Kmart Corp., known for blue-light specials and Martha Stewart sheets, Tuesday filed for Chapter 11 bankruptcy reorganization. And immediately, it started planning to slim down its number of stores and sharpen its strategy for attracting customers.
Done in by dismal holiday sales, a loss of confidence by suppliers and investors, unsuccessful marketing, intense competition and dreary and messy stores, the retailer that traces its roots to a five-and-dime in 1899 Tuesday took the much-anticipated step.
In its filings in U.S. Bankruptcy Court in Chicago, Kmart said it has secured $2 billion in financing from lenders, which will supplement its funds and see it through the year-long reorganization.
Kmart intends to stay in business and emerge leaner and meaner. For now, all its stores are open, and Martha Stewart is sticking by Kmart “for the foreseeable future.”
“It’s all about exiting Chapter 11 now in a successful way,” said Jack Wm. Butler, Jr., a partner with Skadden, Arps, Slate, Meagher & Flom, and the company’s lead bankruptcy counsel.
Kmart said it will reorganize swiftly and come out of what is the largest U.S. retailer bankruptcy next year- a goal that Gary Fischoff, a bankruptcy lawyer in Garden City, N.Y., said may be optimistic for a company of “that size and complexity.”
As part of the reorganization, Troy, Mich.-based Kmart said it will evaluate the performance of all of its 2,114 stores and their leases by the end of the first quarter to decide which to shutter.
Retail analyst Walter Loeb said he believes 350 to 400 locations will close.
Kmart is adding turnaround experts to its management. Tuesday, it named Ronald Hutchison chief restructuring officer, a new position. He and James Adamson, who was elected chairman last week, will work with management to rebuild the retailer. Hutchison and Adamson came from Advantica Restaurant Group, which also runs Denny’s.