TROY, Mich. (July 31, 2000)—Kmart Corp. has announced plans to close 72 of its stores, but Penske Auto Centers Inc. wants to keep open 20 of its outlets co-located with the mass merchandiser´s doomed stores.
"We are assessing all possibilities to keep these locations open," said Randy Lawrence, chief financial officer for Penske Auto. Of the 20 stores, six are free-standing and the remainder share their building with a Kmart store.
In 1995, Penske Corp. purchased 860 Kmart auto service centers and has closed about 200 of the locations since then. The 20 locations in question are "good stores," said Mr. Lawrence. "We would like to keep them."
Kmart´s action will have no effect on the free-standing locations, Mr. Lawrence said. Penske Auto also wants to keep as many of the co-located stores open as it can, even if other retailers take over the vacated Kmart locations, he said.
Penske Auto also will consider relocating any of those stores that are unable to remain in the former Kmart buildings, Mr. Lawrence said.
"In most cases those stores (targeted for closing) are marginally profitable," Kmart said in a press release, but factors like location and suitability for expansion precluded capital investment in these locations.
Along with announcing the closings, Kmart said it plans to spend $670 million to upgrade its information systems and improve its distribution system. This includes new checkout and inventory systems and enlarging two distribution centers.
Kmart didn´t give Penske Auto any advance notice that it plans to close most of the stores by November 1, nor was the mass merchandiser required to do so, added Mr. Lawrence. "We´ll work hard assessing possibilities to keep them (Penske Auto Centers) open," he said.