K mart to Sell U.S. Kresge, Jupiter Stores to McCrory
Apr. 03, 1987
DETROIT (AP) _ K mart Corp., the nation's second-largest retailer, said today it will sell its domestic Kresge and Jupiter stores to McCrory Corp., owner of TG&Y, J.J. Newberry and other retail chains.
K mart said it was selling the stores that gave the company its start 88 years ago because a five-and-dime operation no longer fits into K mart's marketing strategy.
The 76 stores in 21 states will be renamed McCrory 5 & 10 after the transaction closes in early June, K mart said.
The price will depend upon inventory on the closing date. K mart spokeswoman Barbara Palazzolo declined to give an estimate of the price, nor would she say how many dollars in sales the stores generated last year.
''Although the Kresge division has been profitable, it doesn't fit into our corporate growth plans and asset redeployment program,'' said Bernard M. Fauber, K mart chairman.
K mart, based in the Detroit suburb of Troy, is the nation's No. 2 retailer after Chicago-based Sears, Roebuck & Co. K mart operates nearly 4,000 stores in the United States, Canada and Puerto Rico.
McCrory Corp., headquartered in York, Pa., operates 1,250 five-and-dime stores in the United States. It is a subsidiary of Rapid American Corp. of New York, a privately held company.
''The addition of these stores will extend our reach and help us serve the public better,'' said Stephen L. Pistner, McCrory chairman.
The Kresge chain was founded in 1899 by Sebastian S. Kresge. The flagship chain was eclipsed by the company's K mart discount stores. The first K mart was opened in 1962.
''I think people will view this as a small step financially but a big step symbolically,'' Ms. Palazzolo said.
K mart in recent years has sought to upgrade its K mart stores, concentrating on name-brand products, clothing and durable goods. The sale of the low-end Kresge and Jupiter stores is part of that trend, Ms. Palazzolo said.
Kresge and Jupiter ''is a five-and-dime operation, and it did not fit into our merchandising strategy,'' she said.
Ms. Palazzolo said the 68 Kresge stores and 18 Jupiter stores employ about 1,700 people, a small number compared with K mart's total workforce of 300,000.
K mart owns 21 of the store sites and leases the rest, she said.
The 52 Kresge stores in Canada were not part of the sale, she said.
McCrory, in addition to TG&Y and J.J. Newberry, owns the McLellan, H.L. Green, Kress, Silver, Elmore, Britts and Kittinger chains.
K mart also owns Waldenbooks, Builders Square, Pay Less Drug Stores, and Bargain Harolds.
K mart's sales in 1986 totaled $23.8 billion. McCrory spokeswoman Deb Wiles said the company's sales last year were estimated at $1.8 billion.