TROY, Mich. -- Kmart Corp. here is preparing to embark on a substantially revised store-modernization program, which includes the continued rollout of the the Super Kmart Center grocery format but with a reduced number of openings.
Kmart, the nation's second-largest retailer, said last week it would take an after-tax charge of $850 million in the fourth quarter, primarily to cover the costs related to its plan to replace smaller stores with larger ones.
As part of its modernization and store-opening programs, Kmart expects to open 55 Super Kmart Centers in 1994, Mary McGeachy, director of national media relations, told SN last week.
This is fewer than the 60 to 75 supercenter units slated for 1994 as late as October last year. A Super Kmart Center combines a full-line grocery and general-merchandise store under one roof.
However, McGeachy said the estimate of 60 to 75 new supercenters for 1994 represented "an optimistic" forecast and that some units projected for 1994 would carry over until 1995.
To date, the Super Kmart program has "exceeded expectations," she said.
As part of its revised modernization program announced last week, Kmart said it will close and relocate up to 800 of its stores. This is 500 more stores than originally were targeted for closing and relocation at the time the six-year program began in 1990.
The modernization program also includes 700 store expansions, which is 80 more than originally proposed. About 670 stores are expected to be refurbished (without adding square footage), much less than the 1,250 units originally scheduled for refurbishing.
Joseph R. Thomas, executive vice president of U.S. Kmart stores, said Kmart's initial plan called for more than half of its 2,150 stores to be modernized through refurbishment, without adding square footage.
"After extensive review and experience with the very successful 110,000-square-foot prototype Kmart and the Super Kmart Center concepts, it is apparent that many of the stores originally slated for refurbishment are not large enough to provide a strong competitive vehicle for the future," Thomas said.
To date, Kmart has closed 300 stores related to relocations and completed 430 expansions and 450 refurbishments.
The revised modernization program is expected to be completed by the end of 1996.
Additionally, last week Kmart said it expects to sell between 20% and 30% of its four specialty divisions to the public. Kmart will create four series of stock tied to the earnings of each division.
The four divisions are: Builders Square, OfficeMax, the Sports Authority and Borders-Walden.
Kmart said it expected earnings before special charges for the fourth quarter and year-end to fall "well below" year-ago totals.