Fri Mar 8, 4:38 PM ET
By Anna Driver
CHICAGO (Reuters) - Kmart Corp. said on Friday it will close 284 stores and cut 22,000 jobs in its bid to emerge from bankruptcy, but analysts said the retailer still needs a marketing strategy if it wants to survive the cutthroat U.S. discount market.
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The closings, the first the company has announced since it filed for voluntary Chapter 11 bankruptcy on Jan. 22, will shutter 13 percent of its 2,114 stores and reduce its 250,000-person work force by nearly 9 percent. Analysts had speculated that Kmart would close as many as 500 stores. The store closings require bankruptcy court approval.
Kmart, based in Troy, Michigan, said it will take a charge of $1.1 billion to $1.3 billion to cover costs from the restructuring. The company said the closings should increase its earnings before interest, taxes, depreciation and amortization by $31 million a year.
Shares of Kmart closed up 5 cents at $1.29, a rise of more than 4 percent, on the New York Stock Exchange (news - web sites) on Friday. Volume was nearly 19 million shares, making Kmart one of the most actively traded stocks on the exchange.
The stores to be closed include 271 Kmart discount stores and 12 Kmart Supercenters in 40 states, and one Kmart store in Puerto Rico. Kmart's Supercenters carry a full line of groceries and general merchandise.
Texas is set to lose the most Kmart stores, with 33 slated for closure. The company plans to close 21 stores in Illinois, 18 in Michigan and 16 each in Florida and California.
WHAT NOW?
"The closings are important, but what is more important is the strategic direction they are going to take going forward," Wayne Hood, retail analyst at Prudential Securities, said. "How are they going to improve profitability at existing stores?"
Kmart became the largest retailer ever to file for bankruptcy protection after intense competition from rivals Wal-Mart Stores Inc. and Target Corp. and weak holiday sales left the retailer strapped for cash.
Wal-Mart is known for its low prices, and Target has distinguished itself in the discount market by attracting more upscale shoppers with its trendy clothes and housewares by designers like Michael Graves. Analysts have said Kmart lacks a niche and must find one to survive.
"Now comes the real question, and that is what is Kmart going to do to draw lots of customers into all the other stores that will remain open?" Kurt Barnard, president of Barnard's Retail Consulting Group, said.
Kmart tried last year to compete with Wal-Mart on pricing of everyday items like soap and toothpaste with its "Bluelight Always" marketing campaign, but the drive fell short.
Since the bankruptcy filing, Kmart has said little about its plans. But Chuck Conaway, Kmart's chief executive, has said its private brands like Martha Stewart Everyday linens, paints and housewares will be a large part of the company's focus.
"If the stores that remain open can't compete with Wal-Mart, they may have to close more," Frank Badillo, senior economist with consulting firm Retail Forward, said.
Based on sales in 2000, Kmart was the second-largest U.S. discount chain behind Wal-Mart.
Kmart said it expects to liquidate more than $1 billion in inventory as it closes the stores. The actions are forecast to improve the retailer's cash flow by $550 million in 2002 and will result in annual savings of $45 million, Kmart said.
The expected flood of merchandise into U.S. markets may take market share from Wal-Mart and other low-price retailers in the near term, an analyst said.
"What will happen is it will probably temporarily draw bargain hunters to the Kmart stores to see what great buys are there," Retail Forward's Badillo said. "That might shift some demand from Wal-Mart to Kmart."
Badillo said the $1 billion in Kmart merchandise represents 2 percent of the $42 billion in inventory on the books of department stores and discount stores at the end of 2001.
After the flurry of liquidation sales, analysts see Wal-Mart getting the bulk of the business.
Sanford Bernstein retail analyst Emme Kozloff estimates "an immediate market opportunity between $2.5 billion and $3 billion. She said the Kmart store closings could add 1 cent to 3 cents a share to Wal-Mart's annual earnings.
Kmart said at the time of its bankruptcy filing that it would close underperforming stores. The company aims to emerge from bankruptcy in July 2003.
LIST of 284 STORES
http://www.kmartcorp.com/corp/story/.../pr020308b.stm
They are closing stores in about every state,CLEARANCE LIQUIDATION SALES here I come.
That is why I haven't shopped at Kmart in a very long time. I'm a Wally World Girl!!!! 
). 
(J/J)
Have you heard.....?
Re: Maaaaaaaaan DANG
K-MART to CLOSE 284 Stores and CUT 22, 000 JOBS
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