TROY, Mich. -- Kmart Corp. here said last week it expects the store closures it will announce later this month to reduce its sales volume by only 5%.
"We'll downsize to $35 billion, give or take a few billion. That's [still] a lot of money" in terms of sales, said James B. Adamson, Kmart's chairman. But it's not that much of a drop from last year's $37 billion, he suggested.
Adamson, speaking last week at a press conference following the official launch of Kmart's exclusive Disney brand children's merchandise at a New York store, outlined his battle plan for getting through the bankruptcy and strategies for the future.
The top priority: keeping the company together by limiting employee departures and revenue declines. "Programs to keep our employees from going somewhere else, that's our primary investment," he said.
Eliminating weak categories and bolstering strong ones. "The biggest challenge is communicating growth categories and eliminating weaker categories," he said.
Catering to minority populations more by expanding its Martha Stewart marketing effort, for example.
At the press conference, Adamson explained that store closings are not based on geography or demographics. "It's purely financial," and based on earnings before interest, taxes, depreciation and amortization, he said. And even if a store is not meeting its profit goals, it could be retained if the company feels it could improve, Adamson added. Stores are expected to begin closing this summer.
He also discounted some analysts' estimates on store closings, which have been in the 500 to 700 range, as being too high. Kmart operates 2,100 stores and went Chapter 11 on Jan. 22.
Asked if the company will meet its projection of emerging from bankruptcy by summer 2003, Adamson said, "I've been quoted as saying the summer of next year. But that is not satisfactory. Every day we are in bankruptcy; we are less competitive. This is not a complicated bankruptcy. It's a big bankruptcy."