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LET THE KMART SALES BEGIN TROUBLED CHAIN TO LIQUIDATE INVENTORY AT 3 SOUTHLAND STORES.

Byline: Brent Hopkins Staff Writer

Wringing what cash remains from its underperforming stores, Kmart will commence liquidation sales at its Moorpark, Palmdale and West Hills stores by this weekend.

The bankrupt retailer - based in Troy, Mich., and two months into its aggressive reorganization - aims to clear shelves of 283 of its locations nationwide as quickly as next month, spokeswoman Julie Fracker said. Typically, stores of this magnitude take between one month and three to fully close out, depending on how strongly consumers respond to slashed prices.

``The stores should meet with the liquidators today, and if they want to start, it could begin as soon as today,'' Fracker said Thursday. ``Most stores will be well under way by Saturday. It varies by store and depends on what the liquidator's schedule is.''

The complex plan involves a slew of bankruptcy sale pros, including three local firms, the Nassi Group of Westlake Village, Buxbaum Group of Encino and Great American Group of Woodland Hills. SB Capital Group, The Ozer Group, Gordon Brothers Retail Partners and Hilco Merchant Resources will also coordinate the sale.

According to bankruptcy expert Jess Bressi, a partner with real estate law firm Cox, Castle & Nicholson's Irvine office, going out of business sales' strategy requires a fine, subtle touch.

``There's a whole strategy that goes into going out of business,'' he said. ``They'll actually bring things in, because there's a psychological component for consumers when they see that going out of business sign.''

And that psychological component's crucial contribution lies in the first few days of the sale, said Jackie Fernandez, a retail expert with Deloitte & Touche's Los Angeles branch.

``It's a good draw at the beginning, when the markdowns aren't all that substantial,'' she said. ``It'll get customers, because people always want to get a deal, which helps the store sell merchandise it doesn't want. If they're lucky, people think hey, I saved money on these products, I'll go full price on something else.''

The liquidation sales will be key in the local stores, which lost out to the market's dominant players Target and Wal-Mart. The sales should be able to win back customers, Fernandez said, albeit temporarily.

``People are so sale driven here in Southern California, where everyone's got a discount every weekend, an event like this really piques their interest,'' she said. ``Especially if they're items you'd normally buy, you're very likely to go down there and see what you can find.''

The sales should provide brisk traffic at first, Bressi said, providing employees with at least a brief spell of continued work.

``The poor people who work in those stores will have employment awhile longer, but if I were them, I'd start dusting off the old resume,'' he said. ``If I were them, I wouldn't feel the need to go down with the ship ... then again, I'm an attorney.''

In an attempt to shore up the stability of the remaining stores, the chain asked for, and received, permission from the bankruptcy court to maintain its relationships with its major brands, Martha Stewart, Disney, Jaclyn Smith, Joe Boxer and Kathy Ireland. Though this bodes well for the overall health of the chain, it could hinder bankruptcy sales, Bressi said. Though the brands are crucial to keeping sales up in other stores, they're unlikely to show up on discount racks, making liquidation sales less appealing.

``It'll be interesting to see if the good stuff will be there,'' he said. ``I would predict it won't be, because they're worried about the repercussions of making their big brand names angry.''

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(color) Kmart will begin a liquidation sale at its Moorpark, Palmdale and West Hills stores as early as this weekend.

Charlotte Schmid-Maybach/Staff Photographer
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Date:Mar 22, 2002
Words:619
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