<PAGE> 1
EXHIBIT 99.1
KMART CORPORATION ANNOUNCES STRATEGIC ACTIONS
TO ENHANCE FINANCIAL PERFORMANCE
STORE, INVENTORY AND SYSTEMS TECHNOLOGY INITIATIVES
AIMED AT IMPROVING COMPANY'S COMPETITIVE POSITION
SECOND QUARTER, YEAR-END PERFORMANCE EXPECTATIONS REDUCED
TROY, MICH., JULY 25, 2000 - Kmart Corporation (NYSE: KM) today announced a
series of strategic actions aimed at strengthening the Company's financial
performance by enhancing the productivity of its store base, inventory and
information systems. These initiatives include closing stores, accelerating
certain inventory reductions and redefining Kmart's information technology
strategy. As a result of these initiatives, Kmart will record a pretax charge of
$740 million.
Kmart also announced, it anticipates that its earnings for the Second Quarter
2000 and for the year, excluding the $740 million pretax charge, will be below
expectations.
"A non-competitive customer experience, supply chain and store execution have
led to inadequate financial performance. To make Kmart a stronger and more
competitive business model, we must take swift and decisive action to improve
our return on invested capital and create a heightened sense of urgency around
asset productivity," said Chuck Conaway, Chairman and CEO. "With these actions
behind us in 2000, we can focus our resources and energies on expediting supply
chain infrastructure improvements, building a customer-focused culture, and
developing new marketing initiatives so that we can create a new position in the
marketplace and develop a sustainable bond with our customers."
- more -
<PAGE> 2
KMART STRATEGIC ACTIONS 2-2-2-2
Store Closings
Applying more rigorous competitive standards that reflect customer expectations
and return on invested capital, Kmart management has identified 72 stores that
do not fit the Company's long-term plans. While in most cases these stores are
marginally profitable, it was determined they did not justify the related
capital investment due to a variety of factors such as their location and their
suitability for expansion. A total of 66 traditional Kmart and 6 Super Kmart
stores will close, most by November 1, 2000. (These closing stores are listed at
the end of this press release.)
Kmart will take a pretax charge of $300 million in the second quarter to record
a reserve related to store closing costs, and a pretax charge of $75 million to
reflect the anticipated value of inventory at the closed locations.
Inventory Reduction
Kmart management also has set more aggressive performance levels for its
inventory. An assessment of inventory productivity during the second quarter
indicated that certain inventories should be reduced significantly to improve
Kmart's return on investment. To achieve this objective, Kmart will accelerate
planned inventory reductions through chain-wide clearance sales and liquidation
sales at the stores slated to be closed. A pretax charge of $290 million will be
taken to state the inventory at its net realizable value.
Information Technology
As a result of an ongoing assessment of its information technology
infrastructure, Kmart determined in the Second Quarter that certain systems
previously under development and related hardware are no longer applicable. This
action and others will result in a pretax charge of $75 million.
- more -
<PAGE> 3
KMART STRATEGIC ACTIONS 3-3-3-3
In 2000, Kmart will invest a total of $460 million to upgrade its information
systems and $210 million to improve its distribution and logistics network.
Major initiatives underway include the installation of new scanners in all
stores to dramatically speed-up the check-out process; new registers in the
company's 300 highest volume stores; and new systems to help Kmart's merchants
monitor and manage inventory. Kmart is also enlarging two distribution centers,
and installing new sorting equipment and expanding the number of shipping and
receiving doors.
Second-Quarter Earnings
Excluding the special charges resulting from these initiatives, Kmart currently
expects its second quarter earnings from operations to be in the range of $.04
to $.07 per share. Full-year earnings from operations for 2000, excluding the
$740 million pretax charge, will likely be lower than last year and below
expectations. Kmart will report its second quarter results on August 10, 2000.
Following are 66 stores, listed by state, most of which will be closed as of
November 1, 2000. Additionally, there are six other stores in the states of
California, Ohio and New York which will be closed later this year. Employees of
the stores will have the opportunity to apply for jobs at other Kmart locations.
(*Asterisks denote Super Kmart stores.)
Alabama 727 North 9th Ave., Bessemer
1840 Douglas Ave., Brewton
Arizona 8515 N W Grand Ave., Peoria
Arkansas 4124 East McCain Blvd., North Little Rock
- more -
<PAGE> 4
KMART STRATEGIC ACTIONS 4-4-4-4
California 5400 Auburn Blvd., Sacramento
510 E. Virginia Way, Barstow
150 Beach Rd., Marina
1095 South Pulllman, Anaheim*
2761 Jensen Ave., Sanger*
1388 East Main St., Woodland
910 N. Main St., Bishop
Florida 13355 US Hwy. 1, Sebastian
945 West Hwy. 436, Altamonte Springs
1200 Homestead Rd., North, Lehigh Acres
3701 Tamiami Trail East, Naples
13100 66th Street N, Largo
3941 Cattleman Rd., Sarasota
1280 Palm Coast Pkwy, SW, Palm Coast
Georgia 240 Banks Crossing, Fayetteville
1701 Mountain Industrial, Stone Mountain
1106 North St. Augustine, Valdosta*
Illinois 6435 W. Diversey, Chicago
17W734 22nd Street, Oakbrook Terrace
21000 S. Cicero Ave., Matteson
1500 S. Elmhurst Rd., Mount Prospect
1050 North Rte. 53, Addison
510 South Rte. 59, Naperville
450 Airport Rd., Elgin
1555 South Lake St., Mundelein
750 East Rand, Arlington Heights
Indiana 750 Clifty Dr., Madison
305 E. Hwy. 131, Clarksville
Kansas 4301 State Ave., Kansas City
13110 W. 62nd Terr., Shawnee
Kentucky 400 Campbellsville Bypass, Campbellsville
Louisiana St. Charles Plaza, 12717 Hwy. 90, Luling
2800 S. MacArthur Dr., Alexandria*
Maryland 744 Cambridge Plaza, Cambridge
Michigan 3900 E. Outer Dr., Sherwood Plaza, Detroit
3175 Alpine Ave. NW, Walker
Minnesota 5930 Earle Brown Dr., Brooklyn Center
- more -
<PAGE> 5
KMART STRATEGIC ACTIONS 5-5-5-5
Mississippi 3174 Bienville Blvd., Ocean Springs
597 Beasley Rd., Jackson*
Missouri 1717 Rangeline Rd., Joplin
915 S. Jefferson Ave., Lebanon
1225 S. Kirkwood Rd., Kirkwood
3200 Laciede Station Rd., Maplewood
3861 Gravois Ave., St. Louis
Montana 611 S. Haynes St., Miles City
4400 Tenth Ave. S, Great Falls
New Hampshire Mountain Valley Mall, Rte. 16, North Conway
New York 4930 State Hwy. 30, Amsterdam*
North Carolina 1402 Western Blvd., Parkhill Shopping Center, Tarboro
Ohio 1830 E. Main St., Kent
445 Midway Blvd., Elyria
2500 W. State St., Carnation Mall, Alliance
Oregon 1475 Mount Hood Hwy., Woodburn
63455 Hwy. 97N, Bend
Pennsylvania 70 98 E. Forrest Ave., Shrewsbury
24 Airport Square, North Wales
2400 Rte. 61, Coal Township
Rhode Island 288 E. Main Rd., Main Shopping Plaza, Middletown
Texas 4902 Fredericksburg Rd., San Antonio
Washington 1015 S. Boone, Aberdeen
West Virginia 701 Oakvale Rd., Princeton
Wisconsin 2400 W. College Ave., Appleton
- more -
<PAGE> 6
KMART STRATEGIC ACTIONS 6-6-6-6
Kmart Corporation serves America with 2,165 Kmart, Big Kmart and Super Kmart
retail outlets. In addition to serving all 50 states, Kmart operations extend to
Puerto Rico, Guam and the U.S. Virgin Islands. More information about Kmart is
available on the World Wide Web at www.bluelight.com in the "About Kmart"
section.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Statements, other than those based on historical facts, which address
activities, events, or developments that the company expects or anticipates may
occur in the future are forward-looking statements which are based upon a number
of assumptions concerning further conditions that may ultimately prove to be
inaccurate. Actual events and results may materially differ from anticipated
results described in any forward-looking statements. The company's ability to
achieve such results is subject to certain risks and uncertainties, including,
but not limited to, economic and weather conditions which affect buying patterns
of the company's customers, changes in consumer spending and the company's
ability to anticipate buying patterns and implement appropriate inventory
strategies, continued availability of capital and financing, competitive
factors, and other factors affecting business beyond the company's control.
Consequently, all of the forward-looking statements are qualified by these
cautionary statements and there can be no assurance that the results or
developments anticipated by the company will be realized or that they will have
the expected effects on the company or its business operations.
