Local Kmart to close
Published 9:35 pm Tuesday, January 14, 2003
Editor's note: This is a compilation of several stories concerning the closure of the Atmore Kmart that appear in the Jan. 15, 2003 print edition of the Atmore Advance.
By Paul Keane
Amid sobs, words of consulation 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, 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.
"The developments we are announcing today mark an important milestone in Kmart's reorganization," Adamson said. "When we filed our Chapter 11 cases last January, the company anticipated that it would complete the actions required to be taken during its reorganization and emerge from Chapter 11 protection by the second quarter of 2003."
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 conjuction 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 invement 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 1 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.
Shoppers express frustration, shock at closure announcement
By James Crawford
The news on Tuesday that Kmart had announced it would close the Atmore location shocked some residents and left others feeling the sting of frustration, wondering where to go for items you normally can only find at larger retail outlets.
Jessica Laduke, a resident of Walnut Hill, was surprised to find out about the closure and not very happy about it. "It's so close to Walnut Hill, where else are we going to go that's Atmore for you," Laduke said. "Kmart's prices are not that great, but its better than driving 30 to 40 minutes depending on the traffic."
Despite her apparent frustration with the news and its future effect on her shopping habits, she wasn't convinced that it would be the straw that broke the camel's back for the town's future. "I'm not going to say it'll be devastating, but it'll sure be a lot less convenient for a lot of people," Laduke said.
Atmore resident Ray Linam, a retired military personnel who returned to Atmore after his military stint, said the closure would be a good bit of an inconvenience considering he shops at the location five to six times per week. But, he didn't hold a grudge.
"It's handy to have it here and it's easy to come over here and get things. But, I understand a lot of Kmarts are closing right now. It's just business I guess. A lot of Atmore people will just have to coordinate getting things at Wal-Mart in Pensacola. It's sad to see a business like this go, but I don't think they were competitive enough."
Some residents like Howard Weaver see the closing as a foretelling of growing problems in the city that could affect its growth for years to come.
"It's definitely going to hurt Atmore," Weaver said. "The thing is City Hall is going to have to do something to get someone back in here. I haven't shopped in Atmore in years except for Kmart. There's nowhere here to shop. Kmart was the only thing here. You'll have to leave Atmore to shop now."
On an even grimmer note, Weaver said the outlook for replacing Kmart is not good and that Atmore's chances for turning things around are fast running out.
"Atmore is drying up and blowing away. Maybe what the Creek Indians have going with those new contracts will help," Weaver said. "This was a booming town at one time. Places like Bay Minette have outgrown Atmore and it shouldn't have been that way."
Could another major retailer set up shop in area?
By Paul Keane
Could another major retailer come in and fill the void left when Kmart officially closes its doors in Atmore this spring? At least one major retailer has a connection to Atmore, but a number of factors would have to be looked at before any decision could be made.
Target Stores, Inc., is considered to be among the top major retailers in the country, along with Wal-Mart and Kmart. Carpet for many of the Target stores is manufactured in Atmore at Masland Carpets.
Officials with Masland declined to comment on any possible moves, saying that their relationship with the retailer is a vendor-merchant one only.
Brie Heath, a spokesperson for Target, did say that all locations being closed by Kmart will be looked at and studied for possible locations of a Target store.
"As we did the first list of closings, we will review this list carefully," Heath said. "If we decide that one could be a fit for us, then we would continue with the evaluation process."
According to Heath, Target traditionally looks for a location with a retail trade zone of about 100,000 people. A retail trade zone is an area that includes the city limits and surrounding area and encompasses a larger area to attract shoppers.
Target also traditionally looks for a demographic market that includes women ages 45-50 with an average household income of $54,000 and with children at home.
"We also look at the market overall," Heath said. "Is the market saturated already with other retailers, or is there room to grow? We also look at transportation, not only for our guests, but for our distributors as well.
"We study the market very carefully before making a decision on where to locate a store. We're looking to enter a market for the long-term and stay in the market. When we move into the market, we are there to stay."
Mayor begins process of moving on
Atmore Mayor Howard Shell was saddened and a little disappointed by the news Tuesday that Kmart was closing its local store, adding that he and the city will be doing everything possible to bring another large retailer to the area.
"This is certainly something we hate to see happen," Shell said. "We hate to see it happen, especially because this location was a very viable one economically. I was hoping this store could survive the cuts and closures."
Late Tuesday afternoon, Shell said he had been in touch with a consulting firm in Atlanta that specializes in attracting retail businesses, and that he had contacted the owners of the atmore Corners Shopping Center. He also had contacted First District U.S. Congressman Jo Bonner to enlist his aid in the situation.
"The city is doing everything in its power to make Kmart officials aware of just how important this store is to Atmore," Shell said. "And, if we can't convince them to leave this store open, then we are also focusing our efforts on bringing in something to replace the Kmart here."
While saying that official word would have to come from Kmart corporate officials, Shell said that economics may not have played a role in closing Store No. 4833.
"It's my understanding that this particular Kmart did well with retail sales," Shell said. "But it's also my understanding that this store was located on the furthest point of the distribution string. It's my understanding that this store was on the end of the distribution chain for the distribution center that serviced the store."
Shell said the closure will definitely affect the city, as sale tax collections will most likely decrease until another large retailer could be found. The city relies on sales taxes to help pay for city services and programs.
"What we'll try to do is contact some major retailers and see what their interest would be in coming to Atmore," Shell said. "We will also be in touch with the owners of the shopping mall (Atmore Corners) to see what their plans are and what we can do to help fill the void.
"All we can do at this point is work hard, hope and wait."