Kmart closing 326 more stores
By Clint Engel -- Furniture Today, January 20, 2003
Troy, Mich. — Kmart will close another 326 stores and one distribution center in 44 states and cut up to 35,000 jobs as it prepares to emerge from Chapter 11 bankruptcy protection this spring.
This second round of closings could spell opportunity for furniture retailers, according to one real estate expert.
"It creates a huge amount of square footage on the market," said Julius Feinblum, president of Julius M. Feinblum Real Estate, which helped Kmart sell off stores in the first round of closings and will work on this round too.
He estimated that about 20 stores in the first round went to furniture retailers, mainly to lower-end regional players. He expects the industry to take more this time, partly because better real estate generally comes in later rounds.
While the furniture industry has its problems, Feinblum said that interest in retail expansion hasn't slowed.
"I see a big thrust of the vertical (manufacturers' dedicated stores) programs," he said.
He added that a glut of real estate from Kmart — and other large, shaky chains preparing to close stores — should bring down real estate prices, making expansion even more appealing.
Kmart, which filed for bankruptcy protection a year ago and subsequently closed 283 stores, said it has received a commitment for up to $2 billion in exit financing for use when its reorganization plan goes into effect.
The retailer said it expects to emerge from bankruptcy by April 30, ahead of its original schedule.
Store closing sales will begin soon and should generate $500 million in cash flow after expenses, the company said. Kmart will take a restructuring charge of about $1.7 billion, the bulk of it in the fourth quarter of 2002.
After the closings, Kmart will still have more than 1,500 stores in the United States, the Caribbean and Guam.
