Kmart Offers Early Retirement
Friday, March 23rd 2001, 12:00 am
By: News On 6
TROY, Mich. (AP) - About 500 employees at Kmart's headquarters in this Detroit suburb are being offered early retirement packages.
The voluntary buyout program is available to about 500 employees who are 50 years or older and have been with Kmart for at least 10 years. The option, which was announced Thursday, aims to cut costs and help the Troy-based retailer make more money, said Stephen Pagnani, a Kmart spokesman.
No matter how few employees take part in the program, Kmart does not plan layoffs, Pagnani told the Detroit Free Press for a story on Friday.
Continuing to struggle against archrival Wal-Mart Stores Inc., Kmart posted a $244 million loss last year, its first annual loss since 1996. Kmart blamed the loss on costs associated with store closings, technology investments and merchandise markdowns that cut into profits.
And while Kmart, the nation's No. 3 retailer, claims the buyout plan is a typical cost-cutting move, experts say the company may be striving to attract a younger, more tech-savvy staff.
Since replacing retiring Kmart chairman Floyd Hall in May, Chuck Conaway, 40, has been cleaning house, mainly among the top ranks and at the store-management level. On March 14, Kmart president and chief operating officer Andy Giancamilli, 50, resigned after six years with the company.
Conaway has recruited many new executives who are 40 or under, including Mark Schwartz, a former Wal-Mart executive who arrived in September and replaced Giancamilli last week. Schwartz is 40.
``Chuck Conaway wants to bring in new talent, expertise and, above all, people with a thorough familiarity and competence in the use of technology that is so essential to running a retail operation today,'' said Kurt Barnard, publisher of Barnards Retail Trend Report in Upper Montclair, N.J.
Older employees encouraged to take the buyouts ``are probably very good people, but they were not brought up or schooled in the new ways of running a business in a tightly and intensely competitive environment,'' he said.
Kmart officials deny those claims.
Pagnani said the buyout just ``gives people near retirement a chance to retire.''
Employees who choose the early-out option, which is based on age, years of service and the worker's 2001 wages, have a choice between a one-time lump sum or monthly payments. Workers' health insurance coverage can be extended until age 65, when Medicare kicks in.