Kmart plans to shutter 326 stores, close a Texas distribution center and lay off upwards of 35,000 more workers, as it prepares to emerge from bankruptcy by its new target date of April 30, 2003.
The ailing discount chain, which filed for Chapter 11 protection one year ago, said its board of directors has approved a reorganization plan which it will file later this month with the United States Bankruptcy Court.
The company has also received a commitment for up to $2 billion in exit financing from GE, Fleet and Bank of America.
The store closings will include 60 Kmart SuperCenters and 266 Kmart and Big Kmart stores in 44 states and Puerto Rico, or roughly one out of every six locations. The closures, which will cost the company about $1.7 billion in restructuring charges, follow last year’s shuttering of 283 stores and the dismissal of 22,000 employees.
Closing stores while under bankruptcy protection allows Kmart to walk away from unfavorable leases, analysts observed.
Meanwhile, the company reported that net sales decreased 5.7 percent on a same-store basis to $4.71 billion for the five weeks ended Jan. 1. The decline would have been sharper save for the inclusion of Thanksgiving Day and weekend sales, which weren’t included in the prior year period. Net income was $349 million.