Reports of Kmart’s impending demise are reaching a fever pitch.
Sales associates who spoke to Business Insider believe the beleaguered chain is in the process of liquidating many of its remaining 941 stores.
The evidence: Stores are entering numbered phases, i.e., Phase 1, Phase 2, which are accompanied by layoffs, reduced hours and stock-room purges, a practice in which all remaining stock room merchandise is moved to the sales floor.
According to employee message board chatter, Kmart locations are typically shuttered within nine months of a stock-room purge, Business Insider said.
Staffers were told the actions are part of a “Path to Profitability” strategy, or “P2P,” to make the stores more lucrative.
Corporate parent Sears Holdings — which said it would close another 68 Kmart stores this summer after shutting about 50 locations earlier this year — told Business Insider that Kmart remains “a key piece of our asset portfolio.” It said the stock-room clearances are making way for direct-to-shelf deliveries in a refinement of its inventory replenishment process that will allow employees to spend more time on the sales floor.
Over the past 10 years the company has closed about a third of Kmart’s store base while sales fell by half, according to the news report.
Sears acknowledged it is considering additional store closures, layoffs, loans and asset sales to help stem mounting losses, which totaled $471 million in the first quarter, ended April 30.
In an effort to raise cash, the company has already divested its Land’s End, Hometown/Outlet Stores and Canadian divisions; has been tapping its real estate portfolio through sales, sub-leases and a real estate investment trust; and most recently hired a global licensing agent to monetize its Kenmore, Craftsman and DieHard private-label brands.