Gloomy USA Companies 

Kmart Files Chapter 11

K

mart Corporation which was started on 1962 filed for bankruptcy protection on 22 January 2002 after 40 years of corporation, the largest such filing ever made by a retailer.

Speculation on Kmart's financial condition had been intensifying for weeks as the company faced a cash shortage that was accelerated by a slump in holiday sales and a failed price-cutting campaign. But Kmart's underlying problems had been mounting for some time as it lost ground to Wal-Mart the nation's No. 1 retailer, and Target, the discount retailer known for its relatively fashionable merchandise.

Kmart, the nation's third-largest discount retailer, said that all 2,114 of its currently operating stores would remain open for now. But analysts say that several hundred stores will be closed after a corporate review is completed at the end of April, which could mean layoffs for thousands of the company's 240,000 workers. Kmart will also extricate itself from leases on some 350 stores that it has already closed or leased to other companies.

Kmart's fall is bad news for an economy already stung by Enron, which made the largest bankruptcy filing in history, and ripples will be felt by creditors and suppliers. Companies ranging from Eastman Kodak to Delta Galil Industries, a small Israeli underwear maker, said they had millions of dollars in payments outstanding.

Gap's December Sales Flat

Clothing giant Gap Inc revealed that its December sales were flat to the previous year and that its comparable store sales for last month were down 11%, compared to a  6 % fall in the year ago period.

Year-to-date sales of $13.2bn for the 48 weeks ended January 5, 2002 increased 3% compared with sales of $12.8bn for the 48 weeks ended January 6, 2001. The company's year-to-date comparable store sales decreased 13% compared to a decrease of 4% in the prior year. As of January 5, Gap Inc operated 4,179 stores compared to 3,693 stores last year - an increase of 13%.

Jacobson Shuts Stores, Files For Bankruptcy Protection

Troubled specialty apparel retailer Jacobson Stores Inc on 1 January 2002 filed for Chapter 11 bankruptcy protection and announced it was closing five stores with the loss of around 520 jobs.

The closures, which are subject to the approval of a bankruptcy judge, would leave the firm with 18 stores and come just weeks after the company axed 225 of its 4,100 employees and reported a third-quarter net loss of $13.9 million.

Doubts Grow Over Guilford Mills' Future Amid Losses

Troubled textile giant Guilford Mills Inc on January 2002 reported a loss for 2001 of $160.8 million on sales of $643.5m as its auditors voiced doubts over the company's ability to continue as a going concern.

Sales fell 21% compared to fiscal 2000, with sales in the apparel segment down 36% and smaller falls in its automotive and home fashions segments. Sales in the apparel segment during the fourth quarter plunged 47%  on the year ago period as a result of low-priced imports and depressed retail sales.

Ramtex Axes Scores Of Workers

Dozens of workers at textile manufacturer Ramtex Inc lost their jobs when the firm slashes the size of its weaving operation.

The cuts, which affected 85 out of its 650-strong workforce,  was enforced on January 21 when the firm's weaving operation was reduced by a third to eight hour shifts instead of 12 hour shifts. The cuts were in response to poor textile market conditions and an effort to control fabric inventory.

Troubled Burlington Axes 4,000 Jobs

Troubled textile giant Burlington Industries Inc plans to axe up to 4,000 workers in the US and Mexico as it bids to streamline its apparel and fabrics business while under Chapter 11 bankruptcy protection.

The North Carolina-based firm says it plans to slash manufacturing capacity by closing down or selling off five factories within the next six months as part of a major reorganisation.

Burlington will axe 2,800 jobs in the US and a further 1,200 in Mexico although some of those positions could be saved if buyers are found for the plants. It also plans to merge its separate apparel sales and marketing operations under one roof.

Senior executives blamed the job cuts on continuing pressures from cheaper foreign imports and the weak economy.

Levi Strauss To Close Plants In Europe And US

Jeans giant Levi Strauss & Co was in talks with unions about the possible closure of some of its manufacturing plants in the US and in Europe.

In Scotland, where the company operates seven plants, it is proposing to shut two high-cost factories in order to reduce production costs. The number of factory closings in the United States, where the company has eight plants, has not yet been determined. The company reported a 16 % fall in its net income in the fourth quarter ended 25 November to $63 million from $75 million a year ago. Net income for the full year decreased 32% to $151 million compared to $223 million in 2000.  For the full-year, net sales declined 8.3% to $4.259 million from $4.645 million in fiscal 2000.

Levi Strauss - which is one of the world's largest apparel manufacturers - said that its business had been negatively impacted by the difficult economic environment and weak retail markets. It has been particularly hard-hit in Japan, where a number of the company’s retailers have been closed as a result of the economic downturn. 

However, the European business stabilised, experiencing modest growth on a constant currency basis for three consecutive quarters.

Looking ahead to 2002, focus will be on delivering relevant products, continuing to improve operational capabilities, enhancing retail relationships and making sure the brands are available to a broad range of consumer markets.

 Charming Shoppes Axes 207 Stores

Retail giant Charming Shoppes Inc is to axe one of its plus-sized women's clothing chains and 207 stores in a move that will see it take a $37.5 million fourth-quarter pre-tax restructuring charge.

 The company  intends to focus on building its more productive Lane Bryant chain and as a result will close the 77 outlets in the Added Dimensions/Answer chain, along with 130 under-performing Fashion Bug stores.

Most of the store closures will take place in the second half of the fiscal year ending February 1, 2003, with the actions set to improve its annual earnings by $12m before taxes, starting in the fiscal year ending January 31, 2004. 

Galey & Lord Files For Chapter 11 Protection

Textiles manufacturer Galey & Lord Inc, which makes denim for Levi Strauss & Co, filed for Chapter 11 bankruptcy protection on 19 February 2002.

In a press release, Galey & Lord said it had filed for reorganisation because of  poor retail environment and the filing offers the most viable way to restructure its balance sheet and access new working capital while ensuring an uninterrupted flow of product to its customers. Over the past two years, Galey & Lord has taken a number of steps that have reduced its costs and rationalised its production to the appropriate size. As painful as these actions were, they are now complete, and the company does not contemplate any additional plant closures.

Included in the filing are Galey & Lord Industries and Swift Textiles Inc. The company's international subsidiaries, including Klopman International, have not filed for reorganisation and will not be affected.

Galey & Lord makes textiles for sportswear, including cotton casuals, denim and corduroy, and is a major international manufacturer of workwear fabrics.

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