Kmart Corp, the third-largest US discount retailer, plans to fire 22,000 workers and close 284 unprofitable stores as part of its effort to reorganize in Chapter 11 bankruptcy.
The store closings will cost as much as $1.3 billion, the company said in a statement. More than $1 billion of merchandise will be liquidated, said Kmart, which has about 2,100 stores and more than 240,000 workers.
The company asked Judge Susan Pierson Sonderby to approve the plan at a hearing on March 20. Kmart, the biggest retailer ever to file for Chapter 11, struggled to match the low prices and better service of larger rivals Wal-Mart Stores Inc and Target Corp. The recession and disappointing holiday sales last year also helped drive Kmart into bankruptcy.
"Hopefully this will provide the breathing room for them to really reinvent the stores," said analyst Eric Beder of Ladenburg Thalmann & Co.