Kmart closing all of its Alaska stores

Up to 35,000 jobs to be lost nationally

Posted: Tuesday, January 14, 2003

The Super Kmart in Juneau will close this winter, ending about 160 jobs, as part of a further reorganization of the bankrupt company.

Kmart Corp. announced today it will close 326 stores and will shed 30,000 to 35,000 jobs. The closures include all of the company's Alaska stores, with an estimated combined 900 employees, including two Super Kmarts in Anchorage, one each in Fairbanks and Juneau, and a Big Kmart in Kenai.

The stores will liquidate inventory over the next two months and will close by March 14, said Clay Sellers, Kmart's store closing coordinator in Alaska.

Chief executive James Adamson said the company plans to emerge from bankruptcy by April 30.

The Troy, Mich.-based retailer, which filed for Chapter 11 protection nearly a year ago, operates roughly 1,830 stores.

The store closings, which involve 44 states and Puerto Rico, are subject to court approval. Kmart is scheduled to appear in U.S. Bankruptcy Court in Chicago on Jan. 28.

Juneau employees were told the store would be liquidating and closing in 60 days, said Joe Canul, a porter who has worked at the store since Dec. 29. He was corralling shopping carts in the parking lot this morning.

"They're working with us on job placement for the next few days. I'm not sure what everyone's going to be doing, but they're letting everyone know what's going on," he said. "I guess we've got 60 days to think about it, to figure out what you're going to be doing."

Canul said he plans to return to a job at Juneau's Taku Smokeries in February, but Kmart could help if he wants to find something else.

"If I should decide to move on, move out of state, they said they could help," he said.

Juneau's Kmart opened in 1993 on filled land near Switzer Creek.

In spring of 1999, it reorganized and reopened the 120,000-square-foot store as Big Kmart, known as "Big K," increasing its selection of food items. Store managers at the time said they employed about 130 people.

Big Kmart in Juneau further expanded its food selection to become a full-service grocery store when it became Super Kmart in October of 2001, increasing its inventory from 130,000 products to 150,000.

Kmart counted 350 full- and part-time employees after the expansion, when the store was open 24 hours a day. It changed its schedule last June, closing from midnight to 6 a.m. Kmart and other local groceries that had tried a 24-hour schedule said the business didn't justify the cost of staying open.

After Kmart announced plans to close 283 of its 2,114 stores early in 2002, costing 22,000 jobs, it lost its auto service center, a separate business called Penske. Housed in the Kmart building, the Juneau Penske shop closed last April as part of a nationwide agreement between the two businesses.

Kmart's closing means the loss of 900 employees statewide and about 160 in Juneau, said Dan Robinson, a labor economist for the state of Alaska. Kmart couldn't provide exact figures today.

The average monthly wage for Kmart employees in Alaska is $1,700 and the loss will be felt in Alaska households, he said.

"They're not high salaried jobs, but they're a lot of jobs," Robinson said.

Juneau's economy is in a good position to absorb the loss of its sixth-largest private employer, though, said Jim Calvin, an economist with the McDowell Group, a Juneau-based research consulting firm.

"We're in a stable economic position right now, and certainly well-positioned to deal with whatever consequences might flow from closing of Kmart," Calvin said.

The most pronounced economic impact is the loss of jobs, "and the effects that it has on the families that depend on those jobs," Calvin said. "The impact on Juneau's retail sector over the long term is hard to say. Kmart brings in a large amount of products that compete with other retailers in the community."

Kmart, as one of Juneau's largest retailers, is responsible for offering many products in town that are not available elsewhere, and at competitive prices, said Jamie Parsons, director of the Juneau Chamber of Commerce.

"It sure eliminates a lot of jobs and a lot of variety of goods, competition ... Wow," he said. "... They did a lot of business with residents around Juneau, smaller communities, too."

Juneau customers today expressed dismay about the closure. Frank St. Clair, who lives nearby, frequently walks to Super Kmart to shop for groceries.

"Well, I hope another grocery store moves in here," he said. "It's been really handy for me because (otherwise) I have to take a bus to go shopping and right now I live across the street. So it's going to make things harder for me if another grocery store does not move in here."

Stella Deatherage said she stops by the store two or three times a week, mainly for groceries.

"I do a lot of budget shopping here, so yeah, that's going to hurt, most definitely," she said. "Because they do have good sales. Bummer."

Kmart filed for bankruptcy nearly a year ago after a stock dive and disappointing 2001 holiday sales. Kmart needs to close stores while under bankruptcy protection to allow it to get out of leases.

Burt Flickinger, a retail analyst with Reach Marketing, said that although store closings are necessary, the company isn't going about it the right way.

Kmart is basing its closures on performance over the last year "and should be looking at what the business will look like the next 12 months," Flickinger said.

Since Kmart filed for bankruptcy on Jan. 22, 2002, it has lost an additional $2 billion.

"As the company contracts, there's still no sign that it can make any money," Flickinger said. "There's so much uncertainty in what Kmart can do to solve its problems."

But Jordan Kaplan, a professor of managerial science at Long Island University, said the store closings may buy some time for Kmart.

"Hopefully, it will stave off a complete liquidation of Kmart, which of course is always a possibility," Kaplan said.

Kmart has struggled to compete with discount rivals Wal-Mart and Target. Some analysts have suggested there isn't room for Kmart unless it finds some way of distinguishing itself and luring customers.

Other troubles plague the company beyond its business plan. Just before its bankruptcy filing, Kmart began receiving anonymous letters, purporting to be from employees, that suggested wrongdoing at the company.

The letters spawned an investigation into the way the company was run under its former management. Congress, the Justice Department and the Securities and Exchange Commission also are investigating Kmart's decline into bankruptcy.

Christine Schmid and Joanna Markell of the Empire staff contributed to this article.



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