Kmart to close store here

Less than a week after denying it, the Kmart Corporation announced last Friday that its Mountain Home store will be among 284 it will close in the next few months as part of its efforts to reorganize under the Chapter 11 bankruptcy it filed Jan. 22.

Friday, following the announcement, all questions about the closing were directed to the Kmart corporate offices, which had only a recorded message saying the company would not comment on the closings and were not allowing media access to the stores. Local store manager Dallas Scott was unavailable for comment Friday and Monday.

Although no official date has been set, individuals who work at the store have indicated they have been told the Mountain Home store will close some time in the latter half of May. Kmart officials have reportedly said most of the stores on its hit list will close in 60-90 days. The employees were notified Friday. The local Kmart store has employed in the past up to 170 people, although those numbers have declined in recent months.

Local economic development director Ron Swearingen said the closing should have little impact on the property tax rolls for the county, "but obviously, the jobs we're losing are the biggest part of this. When people lose jobs, this is serious."

The closure comes hard on the heels of two major downtown retailers, The Hub and Kings, also closing their doors and leaving employees unemployed.

Swearingen said he had been told recently that the local store likely would be handed over to a company that specializes in liquidations, and which will also help market the building.

"In terms of perception, it's not good to have an empty store up there," adding to the plywood windows in downtown Mountain Home.

The store, which opened to great fanfare and community anticipation several years ago, fell victim to a number of problems, some due to corporate strategy decisions and some due to the direct across-the-street competiton from the new Wal-Mart store, where employees were grinning from ear to ear last Friday as word that their main competitor in town was going under.

Historically, Wal-Mart has often opened stores in direct competition with existing Kmart operations, and often has succeeded in driving them under.

Besides Mountain Home, the other Idaho Kmart that will be closed, in Burley, also faces direct competition from a nearby Wal-Mart. While Kmart has declined, Wal-Mart has become the nation's largest retailer.

Overall, Kmart will slash 22,000 jobs nationally and take a $1.2 billion charge to pay for one-time costs of the moves.

The company, which had sales of $37 billion last year, plans to dispose of more than $1 billion in inventory through store closing sales, the company said. The company will try to sell off the inventory of the stores being closed, rather than reallocate it to surviving stores, wherever possible.

"The decision to close these under-performing stores, which do not meet our financial requirements going forward, is an integral part of the company's reorganization effort," CEO Charles Conaway told CNN Moneyline. "We are confident that doing so will provide the company with a healthier, more productive store.

Some analysts are predicting the 284 store closing are just the first wave of Kmart's efforts to restructure itself, noting that Conaway has indicated that he is pleased with the profitability of only 1,400 of the company's 2,200 retail stores. The company currently has 252,000 employees nationally.

Kmart said Friday that it is awaiting approval of its store-closure plan at a U.S. Bankruptcy Court hearing in Chicago, which is set for March 20.

Last Wednesday a shareholder class action lawsuit was filed against the company in Detroit against CEO Conaway, charging he had made misleading statements about the company's restructuring, claiming it was "revitalizing sales," before the company filed for bankruptcy. The suit was filed on behalf of people who bought Kmart stock between May 17, 2001, and Jan. 22, 2002.

U.S. Bankruptcy Court Judge Susan Sonderby also last week approved the company's request for up to $150 million in bonuses for company middle managers to keep them from jumping to other retailers. Kmart officials told the judge some competitors had set up recruiting offices near the company's headquarters.