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The Detroit Free Press reports that Kmart Corp. will close 326 stores, more than one-sixth of its fleet, and eliminate some 35,000 jobs as it struggles to emerge from the bankruptcy that it declared about a year ago.

The new round of closings and layoffs, which was announced to employees yesterday, is even greater than the 283 stores that were closed last year.

The closings include 266 Kmart and Big Kmart stores and 60 Kmart SuperCenters. Texas is the state hardest hit by the closings, with 54 units there being shuttered. However, Alaska may run a close second; while there are only five Kmarts there being closed down, there were only five Kmarts in the entire state.

Ironically, one of the Kmarts being closed is in Rogers, Arkansas, across the road from the first Wal-Mart store that opened in 1962.

The decision to close the stores comes as Kmart management has been unable to turn things around for the company despite store closings and layoffs, despite a new prototype design for its stores, and despite heavy promotion both before and during the holidays.

Kmart had reported a third-quarter loss of $383 million, compared with a loss of $249 million in the 2001 third quarter, as well as a November 2002 loss of $40 million on sales of $2.47 billion.

Ironically, the company also announced yesterday that it plans to emerge from bankruptcy in April, earlier than planned, and that December 2002 was actually a profitable month for the company. Kmart posted a profit of $349 million in December, though same-store sales fell 5.7 percent for the month.

The states being affected and the number of stores being closed in each one include:

Alabama (6), Alaska (5), Arkansas (2), Arizona (7), California (19), Colorado (6), Connecticut (6), Delaware (1), Florida (25), Georgia (16), Idaho (2), Illinois (9), Indiana (12), Iowa (1), Kansas (3), Kentucky (4), Louisiana (7), Massachusetts (6), Maryland (3), Michigan (13), Minnesota (4), Missouri (6), Mississippi (3), North Carolina (18), North Dakota (2), Nebraska (3), New Jersey (3), New Mexico (1), Nevada (3), New York (14), Ohio (16), Oklahoma (1), Oregon (2), Pennsylvania (6), Puerto Rico (2), Rhode Island (2), South Carolina (3), South Dakota (1), Tennessee (9), Texas (54), Utah (2), Virginia (5), Washington (5), Wisconsin (8), and West Virginia (1).
KC's View:
The fact is that for a long time, Kmart never gave consumers a compelling reason to come into its units, and with the exception of a relationship with Martha Stewart (which because of legal questions about her stock trading activities now looks like it might have been a bad idea), did very little to differentiate itself from the competition.

The company may climb out of bankruptcy. But does it remain creatively bankrupt?

We’d be willing to bet that these won’t be the last of the store closings for Kmart.

Here’s another thought. While we can assume that Wal-Mart will pick up some business once these Kmarts close down, it’ll be interesting to watch other retailers – such as dollar stores – position themselves to capture new customers and volume.