Kmart Will Reorganize Its Distribution Network

Kmart Corp., already in the midst of a massive effort to improve its stores, said Thursday that it plans to restructure its supply chain operations.

As part of the restructuring, the discount retailer will move a distribution center from Carson to Mira Loma, Calif., and another from North Bergen, N.J., to Chambersburg, Pa.

“Reconfiguration of the distribution center network entails the replacement of two aging distribution centers with two state-of-the-art facilities, which will improve productivity and the flow of goods to nearly half of our stores,” Chief Executive Chuck Conaway said.

The closures may lead to job losses. The distribution facility in Carson employs about 300 people, and the New Jersey operation employs about 500 people.

Spokesman Stephen Pagnani said the number of affected jobs will not be known for several months and will be determined partly by union negotiations.

The plan will result in pretax charges of $195 million over the next three quarters, with $150 million taken in the third quarter, Kmart said.

Last year, Kmart announced a nearly $2-billion plan to improve operations at its stores and shore up its infrastructure.

Since then, it has implemented an employee performance bonus program in an effort to improve customer service, closed under-performing stores and invested in checkout technology improvements, among other measures.

Shares of Kmart, which reported a scant 0.2% rise in same-store sales for August, fell 43 cents to close at $9.55 on the New York Stock Exchange.