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All is quiet at Sikeston Kmart

Wednesday, January 23, 2002

SIKESTON - Store managers have clammed up and direct all calls to the corporate office, but the BlueLight still burns at the Sikeston Kmart.

Kmart Corp., long known for its BlueLight Special and discount prices, filed for bankruptcy protection Tuesday becoming the largest retailer to seek shelter from creditors under Chapter 11.

Experts say Kmart will need to close unproductive stores but a firm number of how many will be closed - if any - has not yet been released.

In a Tuesday press release, the company said all 2,114 Kmart stores would remain open and a recorded message for the media at Kmart's corporate affairs department advised: "The company currently does not have any information related to individual Kmart stores closings and until further announcements are made all stores are open for business as usual."

The nation's No. 3 discount retailer has struggled in the fiercely competitive discount market, and debt rating agencies, including Standard & Poor's, have in recent weeks lowered their credit ratings.

The filing was made in U.S. Bankruptcy Court for the Northern District of Illinois in Chicago a day after a major food distributor, Fleming Cos., said it had cut off most shipments to Kmart because the discounter failed to make its regular weekly payment for deliveries. Fleming said Kmart, its largest customer, owed $78 million.

Kmart's bankruptcy declaration is the largest in the retail business since Federated Department Stores Inc. filed for Chapter 11 with assets of $11.4 billion in 1990 and emerged two years later. Kmart's assets in its latest Securities and Exchange Commission filing were just over $17 billion.

The company said that it will reorganize on a fast-track basis and hopes to emerge from Chapter 11 in 2003.

''We are determined to complete our reorganization as quickly and smoothly as possible, while taking full advantage of this chance to make a fresh start and reposition Kmart for the future,'' Kmart CEO Chuck Conaway said in a statement.

Since Conaway became Kmart's CEO in May 2000, he has closed unproductive stores, reintroduced the BlueLight Special discount, and made other changes to help the retailer become more productive and more efficient.

Kmart said its decision to seek bankruptcy protection was based on a combination of factors, including its below-plan sales and earnings performance in the fourth quarter.

Analyst Michael Bernacchi, a professor of marketing at the University of Detroit Mercy, said Kmart suffers because it isn't seen as deep a discounter as Wal-Mart, and it doesn't have the upscale touch that Target portrays.

Despite its current woes, Kmart has seen improvements since it was at the brink of death in the mid-1990s when the company suffered heavy losses, closed stores and laid off employees.

Kmart, founded as S.S. Kresge Co., began as a modest five-and-dime store in downtown Detroit more than a century ago. The first Kmart discount store opened in 1962, and by the 1970s the Kmart stores accounted for most of the company's sales.

The Martha Stewart Everyday brand, which covers such products as sheets, towels, paints and kitchenware, is Kmart's largest volume-producing label, generating about $1 billion in sales last year.

Some information for this story was supplied by the Associated Press.