Local Impact of Kmart Reorganization Hazy

GREATER BOSTON-It is still unclear how Kmart Corporation’s filing for Chapter 11 reorganization will impact its area stores. The company has 29 stores in the state with the greatest concentration of stores in eastern Massachusetts.

The company has not yet announced any store closings but according to Jim Koury, a senior vice president at Spaulding Slye Colliers and a specialist in shopping center sales, the company will look at the profitability of each store as well as the cost of advertising. In major market areas, notes Koury, the cost of advertising goes down as the company can advertise for a number of stores at once. This could impact stores in the more rural parts of the state.

But stores in higher rent areas increase the occupancy costs of a store, as those costs are determined by the gross rent divided by the store’s sales. “If rent is lower it can lower the occupancy costs,” Koury tells GlobeSt.com. “This will account for the profitability of a store.”