Kmart Corporation (NYSE: KM) today announced a cost reduction initiative aimed at aggressively reducing costs within the organization.
The Company has been working diligently to reduce costs since filing for chapter 11 reorganization on Jan. 22, 2002. The completion of this initiative represents a savings of $66 million for the 2002 fiscal year and $130 million annually.
"This cost reduction initiative is absolutely critical to our reorganization," said James. B. Adamson, Chairman and CEO, Kmart Corporation. "We had no alternative but to take this action, the Company continues to take the steps necessary to return to financial health and regain the confidence of its many stakeholders."
As part of our reorganization efforts, Adamson said that the Company will continue to explore all possible ways to control and cut costs including eliminating low-priority projects, re-engineering work processes and consolidating workloads. He said this cost-reduction initiative realigns the organization to reflect the Company's current business needs, following the completion of 283 store closures.
As part of the initiative, beginning today the Company will eliminate approximately 400 positions at Kmart's corporate headquarters and approximately 50 positions located nationally that provide corporate support. The Company also will eliminate approximately 100 current open positions, and will begin phasing out approximately 130 contract positions. The individuals affected will be notified over this week. Kmart stores and distribution centers are not impacted by this cost-reduction initiative.
"These decisions were not made lightly and we are committed to treating our associates with dignity and respect through this difficult process," continued Adamson. "All of those affected are eligible for severance packages that include health care subsidies and outplacement services that will assist them with career transition."
Kmart Corporation is a mass merchandising company that serves America with more than 1,800 Kmart and Kmart SuperCenter retail outlets. Kmart in 2001 had sales of $36 billion.
Cautionary Statement Regarding Forward-Looking Information
Statements made by Kmart which address activities, events or developments that we expect or anticipate may occur in the future are forward-looking statements. Such forward-looking statements are and will be, as the case may be, subject to many risks and uncertainties, including, but not limited to, Kmart's having filed for bankruptcy and factors relating to Kmart's operations and the business environment in which Kmart operates, which may cause the actual results of Kmart to be materially different from any future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include those set forth in Kmart's Annual Report on Form 10-K for the fiscal year ended January 30, 2002 or in other filings made, from time to time, by Kmart with the Securities and Exchange Commission. The forward- looking statements speak only as of the date when made and Kmart does not undertake to update such statements.
Similarly, these and other factors, including the terms of any reorganization plan ultimately confirmed, can affect the value of our various pre-petition liabilities, common stock and/or other equity securities. No assurance can be given as to what values, if any, will be ascribed in the bankruptcy proceedings to each of these constituencies. A plan of reorganization could result in holders of Kmart common stock receiving no value for their interests. Because of such possibilities, the value of the common stock is highly speculative. Accordingly, we urge that appropriate caution be exercised with respect to existing and future investments in any of these liabilities and/or securities.
SOURCE: Kmart Corporation
CONTACT: Kmart Media Relations, +1-248-463-1021
Web site: http://www.kmart.com/