The troubled Kmart Corp. will shut down 72 of its least profitable discount stores nationwide, cutbacks that will cost 5,800 jobs, the company said Thursday.
The retail chain’s sales and profits have lagged in recent years partly because its aging stores have been unable to compete with its rivals’ newer branches. Kmart also has had major inventory problems.
Under pressure from stockholders, the board ousted chief executive and President Joseph Antonini in March. It has yet to name a successor.
The cutbacks announced Thursday follow the closing of 110 stores late last year and early this year as part of a major corporate overhaul. Kmart also relocated, consolidated or closed 120 stores earlier in 1994.
Those changes, along with cuts at the company’s suburban Detroit headquarters, eliminated about 7,100 jobs.
The announcement was expected so did not surprise Wall Street. Kmart’s stock closed up 12.5 cents at $12.875 a share Thursday on the New York Stock Exchange.
The cost of the latest closures was provided for in a $1.35 billion store restructuring charge recorded in the fourth quarter of 1993.
Donald Keeble, vice president of store operations, said the stores have not met performance standards set as part of the restructuring. The stores are in 23 states, with the most in California and Texas. No Washington or Idaho stores are in the latest group slated for closure.
“As we continue to strengthen Kmart’s core business, we will insist that our stores fully meet these investment standards,” Keeble said.
Spokeswoman Mary Lorencz said no more mass closure announcements are expected this year. “Could another store or two close? Yes, because we’re always assessing our stores.”
But analyst L. Wayne Hood of Prudential Securities in Atlanta said many more stores could face closure if their sales do not respond to recent upgrades in inventory and management systems.