Estimates of total additional store closings for the beleaguered discount retailer range from 300 on the low end to almost 600 on the high side. Kmart had 2,114 stores before it closed 283 stores last spring. The company well may be at least a third smaller than it was when it filed for bankruptcy protection.
Analysts are suggesting that Kmart may abandon some markets entirely — such as Arkansas, Wal-Mart’s home, and surrounding states. Walter Loeb, a senior retail analyst at Loeb Associates in New York, could also drop certain lines, such as automotive products or sporting goods. Loeb has been following Kmart for three decades and said the retailer needs to close 300 to 400 stores if it is to return to profitability.
Barry Klein, chairman of Barry M. Klein Realty Enterprises in Farmington Hills, says the number could hit 500 if Christmas sales are especially bad. Meanwhile, Mike Porter, an analyst at Morningstar Inc. in Chicago, said the number could be closer to 300.
The Atlanta Business Journal said in November it had obtained a list of 565 stores to be closed.
Kmart announced Q3 results the Monday before Christmas, reporting a $383 million loss for the quarter ended October 30th, compared with a $249 million loss for Q3 2001. For the first nine months of fiscal 2002, Kmart has lost $2.12 billion, compared with $2.42 billion for all of 2001.
The company stands by its goal of emerging from Chapter 11 bankruptcy protection in Summer 2003.
KEY METRICS:
- EPS loss $0.76 vs. $.50 EPS loss in Q3 2001.
- Q3 net sales decreased 16% to $6.73 bn vs. $8.02 bn in Q3 2001.
- Third quarter same-store sales down 7.6%.
- November comps dropped 17.2%.
- Q3 Gross Margins at 17%.
- SG&A rose 70 basis points.
- $1.57 bn left on DIP credit facility.
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