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Blue light flickers, goes out

Kmart employee Chris Allman takes a breakoutside the store Friday. Kmart corporate offices recently confirmed thatCrescent City's store will be among those closed by the ailing retailer. ().
Kmart employee Chris Allman takes a breakoutside the store Friday. Kmart corporate offices recently confirmed thatCrescent City's store will be among those closed by the ailing retailer. ().

By Kent Gray

Triplicate staff writer

After weeks of rumors, Kmart announced yesterday it will permanently turn out the lights at its Crescent City store by June.

Six weeks after filing for Chapter 11 bankruptcy protection, the Michigan-based Kmart Corporation released a list of 248 under-performing stores nationwide slated for closure. The Crescent City store is among 16 California stores on the list.

Im going to be getting a job at the recreation center, said Crescent City Kmart employee Chris Allman. Ill keep working here until they tell me not to work anymore.

A Kmart spokesperson in San Francisco, Abigail Jacobs, said the company will do what it can for displaced employees in Crescent City.

They will receive their benefits and job-placement counseling, Jacobs said. But, unfortunately, since the jobs are being eliminated there will not be any severance packages.

Jacobs said the Crescent City store, at 520 Highway 101 North, employs about 65 people.

Although Jacobs declined to comment on how much the payroll is at the store, a letter recently written by Del Norte County Supervisor Chuck Blackburn and Crescent City Mayor Herb Kolodner estimated the payroll at $1 million annually.

The Blackburn/Kolodner letter was designed as a plea to the Kmart corporation to keep the local store open. Jacobs said such a plea would be ineffective.

We really appreciate that kind of interest and we realize the strain this puts on employees, Jacobs said. But this is a business decision and there were a lot of people, creditors, suppliers and customers nationwide involved in this. We have done our best in the interest of all these groups.

Carol J. Leuthold, Crescent Citys finance director and treasurer, said by law she cannot give out the citys sales tax revenue generated through Kmart sales, but admitted the closure will have an impact.

Its probably going to be a significant amount, but anything specific I am not allowed to say, Leuthold said. Of course were very disappointed and we wish they would reconsider, but I doubt there is much we can do about it.

Jacobs said the company hopes its bankruptcy court appearance on March 20 will grant the company approval in shutting down the stores.

If the court grants us the authority to close the stores, then we will sell off the merchandise and liquidate the inventories, said Jacobs. The store closure dates will depend on how quickly this is done, but we anticipate sometime in late June.

Allman said he was told the Crescent City store would close on June 6.

The Little Caesars pizzeria that occupies an area in the northeast portion of the store will close sooner, Jacobs said, probably in the next couple of weeks. The Kmart corporation does not own, but leases its building in Crescent City, according to Jacobs.

The nations third biggest discount retailer after Wal-Mart and Target, Kmart currently operates more than 2,100 stores nationwide. The job cuts amount to just under 9 percent of its work force of about 250,000.

The stores to be closed include 271 Kmart discount stores and 12 Kmart Supercenters in cities across the country, including Atlanta, Chicago, Cleveland, Dallas, Los Angeles, Miami, Oklahoma City, Nashville and Phoenix. One store is in Puerto Rico.

The decision to close these underperforming stores, which do not meet our financial requirements going forward, is an integral part of the companys reorganization effort, Chuck Conaway, chief executive, said in a statement.

While the business rationale supporting this action is compelling, we deeply regret the impact these store closings will have on our associates, our customers and the communities where these stores are located, he said.

Kmart said it anticipates that the sales generated from store closings and related cost-savings will be about $550 million in 2002 and about $45 million annually after that.

Kmart filed for Chapter 11 bankruptcy protection on Jan. 22, following lower-than-expected holiday sales, downgrades by several credit-rating agencies and a stock dive.

On Wednesday, a bankruptcy court approved $2 billion in additional financing for Kmart, plus up to $150 million in bonuses for employees who help the company get off the rocks.

The $150 million is a ceiling on bonuses Kmart can pay to vice presidents, various middle managers and pharmacists whom it considers crucial to keeping stores in operation.

Union attorney William Widmer ridiculed the notion that more than 9,000 employees are the key to Kmarts longevity. He said those likely to get the money were to blame for the companys woes.

The Associated Press contributed to this report.

 


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