Kmart Corp. plans to announce next month which stores it wants to close under its ongoing bankruptcy reorganization.
The retailer’s top attorney, John W. Butler Jr., told a meeting of vendors and creditors Thursday that Kmart plans to emerge from bankruptcy by as early as July 2003.
In the hour-long meeting in, Butler told a ballroom full of hundreds of creditors and vendors that Kmart will outline its plans to close under-performing stores at a court hearing March 20, The Associated Press reported.
The retailer, which is reviewing the financial performance of its 2,100 stores, hasn’t announced the number of units it plans to close. Some analysts say Kmart could close between 250 and 500 locations.
During the meeting, attended by Kmart CEO Chuck Conaway, Butler said Kmart plans to shore-up relationships with key suppliers, slash operating costs, and close money-losing locations, according to The Detroit Free Press.
Butler also said Kmart plans to tell the court at a hearing on March 6 that it needs to maintain its relationships with name-brand suppliers such as Martha Stewart, Disney and Joe Boxer, the newspaper reported.
The 103-year-old retailer, which filed for bankruptcy protection Jan. 22, has more than 1 million creditors and debts of approximately $10.3 billion. Those creditors will eventually vote on the retailer’s restructuring plan.
According to The Detroit Free Press, Butler told the meeting Kmart is moving to get out of 270 leases for empty properties, as well as leases for former subsidiaries. The company is sending 10-day notices to landlords of 70 other similar properties.
Kmart also plans to slash $350 million a year through other means not related to store closings, including staff reductions, office consolidations and other changes.
Butler told reporters at the meeting he feels optimistic Kmart's creditors will cooperate with the company’s restructuring effort.
Kmart has already made some progress in that effort. Last week, the company announced it had received court approval to continue providing wages and benefits to its employees, and that many of its key vendors had resumed merchandise shipments under normal terms. The retailer also said it had received interim court approval for a $2 billion debtor-in-possession credit facility.
The court gave Kmart immediate access to more than $1 billion of that $2 billion, which is being provided by a group of banks led by JPMorgan Chase Bank, Fleet RetailInc., General Electric Capital Corp. and Credit Suisse First Boston.
-- Staff and wire reports