By Randy Tucker
The Cincinnati Enquirer

Kmart's blue-light special could be fading to black as the struggling discount retailer announced Tuesday that it will close another 326 stores - including five in the Tristate - in its second round of store closings in less than a year.

The closings will eliminate more than 35,000 jobs nationwide and will deal a blow to not only the employees, but also to shopping center owners and stores that share space with Kmart.

KMART'S HISTORY

1899: S.S. Kresge Co. founded by Sebastian S. Kresge. 1912: S.S. Kresge Co. incorporated in Delaware with 85 stores and sales of $10,325,000. 1916: S.S. Kresge Co. reincorporated in Michigan. 1962: Company opened first Kmart discount department store in a suburb of Detroit. 1966: Sales topped $1 billion mark for the first time. Number of stores climbed to 915, including 162 Kmart stores. 1972: S.S. Kresge Co. headquarters moved from Detroit to Troy, Mich. 1976: S.S. Kresge opened a record 271 Kmart stores, the first time a retailer launched 17 million square feet of retail space in a single year. Total stores reached 1,647; of those, 1,206 were Kmart stores. 1977: Name changed from S.S. Kresge Co. to Kmart Corp. to reflect that in 1976, sales at Kmart stores accounted for 94.5 percent of the company's domestic consolidated sales. 1981: The 2,000th Kmart store opened. At year end, there were 2,055 Kmart stores in the U.S., Canada and Puerto Rico. January 2002: Kmart filed for Chapter 11 bankruptcy protection. March 2002: Kmart announced it would close 284 stores, affecting 22,000 jobs. Kmart later reduced the number to 283. Jan. 14, 2003: Kmart said it would close 326 stores and cut 30,000-35,000 jobs. Source: Kmart Corp.

In some Tristate locations, Kmart is the anchor store for a strip mall, responsible for bringing in much of that mall's business and the base rent for landlords.

"If they (Kmart) go away, what's the impetus for people to drive there?" said J.R. Anderson of Anderson Real Estate, a major strip center operator in the Tristate, but one who is unaffected by the Kmart closings. "You'll just have less retail traffic going to that area.''

Big Kmarts at 3710 Alexandria Pike, Cold Spring; 5500 Ridge Road, Columbia Township; 5025 Delhi Road, Delhi Township; 1425 Columbus Ave., Lebanon; and 12035 Lebanon Road, Sharonville, are to be closed by April 30, when Kmart said it expects to emerge from bankruptcy protection.

"We don't want to remain in bankruptcy a day longer than necessary," chief executive James Adamson said in a conference call with reporters.

Kmart closed 283 stores last year after seeking Chapter 11 bankruptcy protection in the wake of disappointing 2001 holiday sales.

The 105-year-old Troy, Mich.-based retailer, which operates roughly 1,830 stores and has about 228,000 employees, said the move resulted in savings of about $550 million last year.

But Kmart, the nation's No. 3 discount chain after Wal-Mart and Target, has lost more than $2 billion since declaring bankruptcy and has seen sales decline at stores that have been open at least a year as it competes against Wal-Mart's lower prices and Target's more upscale merchandise.

The store closings are necessary to reduce losses, experts say, but the key to Kmart's survival will be its ability to bring shoppers back.

Some analysts don't give Kmart much of a chance.

"The handwriting's on the wall," said Peter Chapman of Bankruptcy Creditors' Service Inc., a New Jersey research firm. "It's this gradual, perpetual wind-down, unless somebody comes up with a good merchandising idea."

The store closings announced Tuesday are subject to court approval. Kmart is scheduled to appear Jan. 28 in U.S. Bankruptcy Court in Chicago.

Calls to local stores were referred to the company's media relations department. Calls to Kmart's media relation's hot line were not returned Tuesday.

It was unclear whether affected employees can apply for openings at other Kmarts or whether they'll be offered severance packages.

Adding to Kmart's problems is the prospect that many of its business partners might desert the retailer, cutting off supplies out of fear that Kmart might not be able to pay up, said Kurt Barnard, a longtime retail analyst and president of Barnard's Retail Consulting Group.

"Kmart's fate is in the hands of the vendors," Mr. Barnard said. "If the vendors lose faith and lose confidence in Kmart's ability to survive and pay ... vendors will pull the plug.''

The Associated Press and Bloomberg News contributed to this report.

E-mail rtucker@enquirer.com.