SALE'S OVER FOR RETAILERS HOLIDAY WAS BLEAK; KMART TO SHUT 326 MORE STORES.

Byline: Brent Hopkins Staff Writer

The retail world got a double dose of bad news Tuesday with Kmart Corp. announcing another sweeping round of store closures and the National Retail Federation releasing dismal final holiday shopping numbers.

None of the bankrupt retailer's planned 326 closures will affect the local region, but its up-to-37,000 national job cuts hardly spells good news for the deeply troubled sector. In addition, the NRF's announcement that holiday sales rose only a scant 2.2 percent from the year before came as yet another confirmation that the crucial fourth quarter suffered badly as consumers held on to their dollars.

The trade group had maintained its estimate of 4 percent sales gain throughout most of the season, revising it to 3.5 percent Dec. 26. Its findings that it had badly missed its target dampened the normally optimistic trade group's morning release.

``What do you do? It's the truth,'' said spokeswoman Ellen Tolley. ``People stuck to their budgets. Certainly, retailers were hoping for higher but people just didn't spend. You win some, you lose some.''

By most estimates, this was indeed a losing season. Though most retailers' stocks held relatively steady Tuesday, Kmart's announcement did little to bolster confidence in the sector. Richard Giss, a partner of consumer business practice in Deloitte & Touche's Los Angeles office, projected no turnaround until the second quarter, at least.

``It's going to be tough for a while,'' Giss said. ``December sales just were real disappointing. Everyone had modest hopes, and we didn't even meet them.''

Which could have sealed Kmart's decision to ax stores in 44 states, subject to bankruptcy court approval. The chain reported that same-store sales had fallen 5.7 percent in December, though it was able to turn a profit of $349 million for the fourth quarter, its first time in the black since filing for Chapter 11 protection a year ago. Giss said the latest round of closures likely hinged on holiday performance.

``It doesn't come as a surprise,'' he said. ``The last thing Kmart needed was a bad holiday season. When you're trying to reorganize a retailer, you have too many fires to fight for the economy to be one of them.''

The company plans on emerging from bankruptcy April 30, when it will issue new common stock to creditors. The move will kill its current stock, traded over the counter as KMRTQ, wiping out its value. This news sent its stock plunging almost an additional 34 percent, dropping to 17 cents.

Some silver linings, however, do exist. Edie Clark, a spokeswoman for the International Mass Retail Association, the trade group that represents large chains, including Kmart, said its 35,000 trained workers could be absorbed into the work force and its darkened locations could be picked up by chains on the expansion path.

``Depending on what their focus is on, cities or the strip malls that Kmart anchored so effectively for so many years, it opens up a lot of opportunities,'' Clark said.

While that's good for chains like Wal-Mart and Kohl's, both looking to grow their presence in California, they might not find too many shoppers frequenting the stores anytime soon. Patrice Duker, spokeswoman for the International Council of Shopping Centers, termed the holiday season ``very, very soft,'' and sees no turnaround on the horizon.

``There was a pent-up demand, since consumers didn't go crazy for the 10 months before the season,'' she said. ``And things looked good going into the Thanksgiving weekend, but things never really picked up. We'll see a slow year unless there's a big change.''

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Associated Press