Retail giant Kmart Corp. officially emerged Tuesday from Chapter 11.
The third-largest U.S. discount retailer, which filed for Bankruptcy Court protection in January 2002, emerges with 600 fewer stores, $2 billion in financing and a new management team.
The company said it named investor Edward Lampert, head of hedge fund ESL Investments Inc., as chairman of its board of directors.
ESL Investments owns about half of Kmart's stock and controls four of nine seats on the board. Lampert, perhaps best known outside hedge fund circles for being the subject of a kidnapping for just over a day in January, also is on the boards of AutoNation Inc. and AutoZone Inc.
During the 15 months it spent under protection from creditors, Kmart closed nearly 30% of its 2,100 stores, cut more than 60,000 jobs, replaced its top executives and board of directors, and swapped most of its debt for equity.
It also lined up new investors, led by ESL.
Some analysts question whether Kmart has a strategy that can compete in a cutthroat discount sector, noting that rivals Wal-Mart Stores Inc. and Target Corp. have opened hundreds of new stores while Kmart has been closing locations.
Kmart had higher sales than Wal-Mart just 15 years ago but now expects to record only about one-tenth of Wal-Mart's sales total for 2003.
Kmart, squeezed between Wal-Mart's low prices and Target's trendy merchandise, hopes to turn a profit next year.
Troy, Mich.-based Kmart on Tuesday posted a $483-million loss for March, its third straight month of losses.
March sales at stores open at least one year dropped 7.4%.
The retailer also said it would stop issuing earnings guidance, other than what is reported in its required filings with the Securities and Exchange Commission.
Kmart said it appointed James Gooch as vice president and treasurer and still is searching for a chief financial officer.