Published Wednesday, January 15, 2003
By Michael Roknick
Herald Business Editor
and Associated Press
Attention Kmart shoppers, the Bluelight Special is going to remain in Hermitage.
Kmart Corp. announced Tuesday the company will close 326 stores and shed between 30,000 to 35,000 jobs but that its Hermitage store would remain open. Closing the stores is part of the Troy, Mich.-based company's strategy to emerge from Chapter 11 bankruptcy by April 30.
Local business leaders were carefully watching Kmart's plans for the Hermitage Towne Plaza store not only as a sign of its performance, but as an indicator on the area's overall retail health.
"Keeping the store operational and in the plaza is a big plus,'' said David Grande, chief executive officer of the Shenango Valley Chamber of Commerce. "That's a big boost for that plaza in not having to find a tenant for that large of a building. Hopefully, all the jobs at the store will remain
Last year Phar-Mor closed its doors at the plaza last summer and Family Toy Warehouse also folded year-end at the plaza.
"Obviously, we didn't want to see another vacancy in the center of the business district,'' said Gary Hinkson, Hermitage city manager.
Over the years retail discounters Ames and Hills bit the dust in Hermitage along with Heilig-Meyers, a furniture chain.
"We're pleased Kmart has decided to continue to compete in this market,'' Hinkson added.
Wal-Mart, which has a superstore in Hempfield Township and regular stores in Hermitage and Pine Township, has been taking a hard look in settling a superstore in Hermitage. A developer is currently showcasing a large vacant lot next to Stupka Motors along Route 18 to Wal-Mart but so far no definite deal is in hand.
As for Kmart Tuesday's announcement marks the second round of closings in less than a year.
Last March, Kmart closed 283 stores, affecting 22,000 jobs. Analysts had predicted that this spate of closings would be 300 to 600 stores.
Currently operating roughly 1,830 stores, Kmart is closing stores in 44 states and Puerto Rico. The closings also include one distribution center in Texas.
All the store closings are subject to court approval and Kmart is scheduled to appear in U.S. Bankruptcy Court in Chicago on Jan. 28.
Kmart filed for bankruptcy nearly a year ago after a stock dive and disappointing 2001 holiday sales. Kmart needs to close stores while under bankruptcy protection to allow it to get out of leases.
Burt Flickinger, a retail analyst with Reach Marketing, says while store closings are necessary, the company isn't going about it the right way.
Kmart is basing its closures on performance over the last year "and should be looking at what the business will look like the next 12 months," Flickinger says.
Since Kmart filed for bankruptcy on Jan. 22, 2002, it has lost an additional $2 billion and faces declines in same-store sales, sales at stores open at least a year.
"As the company contracts, there's still no sign that it can make any money," Flickinger says. "There's so much uncertainty in what Kmart can do to solve its problems."
But Jordan Kaplan, a professor of managerial science at Long Island University, said the store closings may buy some time for Kmart.
"Hopefully, it will stave off a complete liquidation of Kmart -- which of course is always a possibility," Kaplan said.