Atmore Kmart part of nationwide closing
Published 7:26 am Wednesday, January 15, 2003
By By PAUL KEANE – Special to The Standard
Amid sobs, words of consolation and some small outbursts of anger, employees at Atmore's Kmart No. 4388 learned Tuesday morning that the retailer was closing the local store.
Employees were prohibited from speaking to members of the media at the Atmore location, and Store Manager Randall Shuttlesworth was unavailable for comment. Corporate officials coming from company headquarters in Troy, Mich., referred members of the media to a corporate information hotline, which had a recorded message throughout the day.
While not speaking for the record, many of the more than 80 employees were seen in tears and appeared to be shocked by the sudden announcement. The group of employees were among nearly 25,000 who were informed Tuesday they would be losing their jobs due to the store closures.
The Atmore store, along with stores in Madison, Mobile and two in Montgomery, will be closed as part of the corporation's reorganization plans under a Chapter 11 bankruptcy proceeding. Company officials did not announce a formal closing date for the local store, but it was rumored to be as early as April 1.
While the Mobile store on Airport Road was among the group of stores being closed, the location in Saraland and the Big K Store in Pensacola were not on the list of stores being closed that was provided by the company's website at www.kmart.com.
Through a prepared statement, Kmart Chairman and CEO James B. Adamson said the decision was a difficult one to make as the beleaguered retailer prepares to present its final reorganization plan to emerge from the bankruptcy that has plagued it for more than a year. The company expects to emerge from bankruptcy sometime this summer.
Officials with the company have requested a hearing with the Bankruptcy Court on Jan. 28 to obtain authority to make certain payments to exit lenders in conjunction with its $2 billion exit facility. Also on Tuesday, Kmart received a commitment for up to $2 billion in exit financing from three lenders. That amount is secured by investment and would replace the company's current $2 billion debtor-in-possession (DIP) facility on the effective date of a Plan of Reorganization.
Officials have said the affected stores would remain open pending Bankruptcy Court approval of the store-closing plan and completion of inventory clearance sales at the locations. If the courts approve the store-closing plan, then clearance sales could start immediately, and the distribution center is expected to close in March.
In a highly competitive market dominated by Wal-Mart and Target, Kmart has struggled with its reorganization plan.
Just Monday, Kmart stock was listed at 26 cents a share, down from a month-long high of 31 cents on Dec. 24. Just three days after reporting that net sales during the four-week Christmas period decreased by one percent based on same-store analysis, the stock dropped to three cents a share on Dec. 26.
The stock dropped so significantly that it was no longer carried on the New York Stock Exchange. Instead, on Dec. 23, the company made a switch to Pink Sheets, a new stock market exchange for various companies.
For the 13 weeks ending on Oct. 30, 2002, Kmart reported a net loss of $383 million, or 76 cents a share, versus a restated net loss of $249 million, or 50 cents a share, for the 13 weeks ending Oct. 31, 2001.
Net sales for the 2002 third quarter were $6.73 billion, compared with $8.02 billion in the same quarter in 2001. Kmart closed 283 stores it declared "underperforming" in the second quarter of 2002.