Cape Kmart survives massive corporate cutback

The Cape Girardeau Kmart has dodged a bullet -- again.

Kmart announced its second -- and biggest -- round of cutbacks Tuesday, saying it will close 326 more stores and eliminate 37,000 more jobs in hopes of getting out of bankruptcy by the end of April.

But the Kmart in Cape Girardeau was not among them, leaving about 100 employees breathing a sigh of relief and customers glad that they won't be deprived of shopping options.

Corporate officials said that the Cape Girardeau Kmart had nothing to worry about.

"We looked at portfolios, financial and strategic aspects," said Kmart spokeswoman Renee Gielniak from the corporate headquarters in Troy, Mich. "We looked at store sales, growth margins and cash flow. Based on that, there was no reason to close that store."

She also said there shouldn't be any future threats of the Cape Girardeau store closing.

"We don't expect any additional closures, so there's no reason to ever expect this store to close," she said.

While store manager John Willems declined to comment, customers were more than glad to talk, saying it's a positive for the town and the store that the Kmart here survived.

"Evidently, it must be doing better than the other stores," said Stacy Hargrove of Oran, Mo. "I actually like Wal-Mart better, but I'm glad they're not closing our Kmart. The service here was always pretty good."

Everett Way of Cape Girardeau said he was glad the employees wouldn't be out of work.

"It's always good not to lose more jobs in town," Way said as he left the store at 11 S. Kingshighway. "This is a conveniently located store. Schnucks is next to it. You can park in the middle and shop at both of them. And Wal-Mart has gotten too big."

Shrinking chain

The discount chain that pioneered the blue-light special and introduced Martha Stewart styles to the masses will still have some 1,500 stores and about 191,000 employees if the cutbacks are approved by a federal bankruptcy judge. But Kmart will emerge from bankruptcy one-third smaller than it was when it went in.

"We don't want to remain in bankruptcy a day longer than necessary," chief executive James Adamson said.

Kmart filed for Chapter 11 protection from its creditors a year ago after failing to compete with Wal-Mart's low prices and Target's hipper merchandise. In its first round of cutbacks, it closed 283 stores and cut 22,000 jobs last year but still lost more than $2 billion. That move included closing the Sikeston store.

This second round of closings affects stores in 44 states and Puerto Rico. Texas will lose 54 stores and a distribution center. Florida will lose 24 stores, California 19, North Carolina 18 and Georgia 16.

Experts said the latest cutbacks may not be enough.

"I think they've got to get beyond lean and mean. They've got to get small, real small," said Anthony Sabino, associate professor of business at St. John's University.

Arun Jain, a marketing professor at the University at Buffalo School of Management, suggested Kmart needs to find some way of distinguishing itself from the competition.

"Wal-Mart and Target are going to rip them up," Jain said.

Since filing for bankruptcy, Kmart has seen declines in sales at stores open at least a year. Sales in November were down 17.2 percent from a year earlier, and December sales were off 5.7 percent.

Kmart is closing under-performing stores and those facing tough competition, and is also looking to shed unprofitable leases.

But Kmart has troubles beyond its business plan.

Just before its bankruptcy filing, Kmart began receiving letters, purporting to be from employees, that suggested wrongdoing at the company. The letters led to an investigation by the FBI and the Securities and Exchange Commission into the way Kmart was run under its former management.

Mitch Givens of Chaffee, Mo., didn't know anything about that. He was just glad to hear that his favorite store was staying put.

"We come here every week," he said. "We buy diapers, clothes. It would be bad news for us if they closed it down."

Southeast Missourian business editor Scott Moyers contributed to this report.