Kmart Corporation announced the implementation of an anticipated strategic restructuring of its corporate and headquarters operations initiative, aimed at aligning these functions with the Company’s go-forward store base and preparing the organization for emergence from Chapter 11 reorganization next month.
“The realignment and restructuring of our corporate headcount and operations to more closely support our stores is absolutely critical to Kmart’s future success after it completes its Chapter 11 reorganization,” said Julian C. Day, President and Chief Executive Officer of Kmart. “We continue to take the necessary actions to create a financially healthy, cost-effective organization that is positioned to compete in the discount sector. We are similarly committed to continuing to regain the confidence of Kmart’s many stakeholders and are appreciative of the strong support of our reorganization plan and timetable by our employees, statutory creditors committees, emergence lenders and plan investors.”
Day said this cost-reduction initiative realigns the organization to better reflect the Company’s ongoing business needs following the completion of its Chapter 11 store closure program and also reflects the “new” Kmart’s disciplined, low-risk approach to managing its business.
As part of the initiative, beginning today, the Company will eliminate approximately 400 positions at Kmart’s corporate headquarters and 123 positions located nationally that provide corporate support. The Company also will eliminate 137 positions that are currently open. The Company expects to notify most of the individuals affected by the end of today. Kmart stores and distribution centers are not impacted by this initiative.
Day continued, “The decisions resulting in today’s announcement were very difficult. As we prepare to exit Chapter 11 in April, we are extremely appreciative of the contributions our associates have made while the Company has undergone this major restructuring. Throughout the process, we have been, and continue to be, committed to treating our associates with dignity and respect.”
Associates affected are eligible for severance considerations that include health care subsidies and outplacement services that will assist them with career transition.
Upon completion of this initiative, Kmart expects to achieve a savings of $90 million for the 2003 fiscal year and $150 million annually.
