Chambersburg Kmart distribution center to close; local store among hundreds up for sale
CHAMBERSBURG -- The Kmart distribution center on Nitterhouse Drive is closing.
Sears Holdings, which operates both Kmart and Sears stores, is reorganizing in bankruptcy court. The company this year announced nearly 200 store closings and has opened bidding for more than 500 of its profitable stores.
L. Michael Ross, president of the Franklin County Area Development Corp., said the closing of the local distribution center “effective immediately” would impact about 140 workers. PA CareerLink is planning a rapid response to help displaced workers.
Sears Holdings is mum. It has not issued statements on the closing of its Kmart Regional Specialty Center, 1475 Nitterhouse Drive. Company officials did not respond to questions that a reporter emailed to them. The company also has not filed a notice of layoffs with the Pennsylvania Department of Labor and Industry. The state requires a company to file a WARN at least 60 days before a mass layoff. The warehouse continues to advertise job openings online.
The state's Rapid Response Coordination Services helps displaced workers return to the workforce, whether or not a WARN letter is received, according to Lindsay Bracale, spokeswoman for the state Labor Department. Coordinators will meet with the employer and any affected workers to provide information about unemployment insurance, health and pension benefits, financial credit counseling, training programs, job search activities, education services, and social service programs.
Warehouse workers in demand
Sears Holdings is closing at least two other distribution warehouses in 2019, according to published accounts. The Kmart regional distribution center in Bazetta, Ohio, employing about 60 people is to close in mid-February. A Northside Jacksonville, Fla., distribution center employing an estimated 400 workers is to close in April.
The company has said it is aligning its supply chain with its forecasted sales volume.
“With Sears in bankruptcy and trying to reorganize, it came time to accept and reject leases,” Ross said. “They obviously rejected this one. It’s unfortunate. I think the Chambersburg facility has always done well in the corporate structure of Sears and Kmart.”
Ross said displaced Kmart distribution employees should have no problem finding a similar job locally.
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Other distribution warehouses in the area also are looking for workers.
Franklin County’s unemployment rate hovers around 3 percent. Warehouses and trucking firms employ more than 6,000 people, or 11 percent of the county workforce. Only the health care and manufacturing sectors employ more people.
Sears and Kmart merged in 2005. Parent company Sears Holdings has been slashing stores in recent years.
“I don’t know what is salvageable with Sears Holdings and Kmart,” Ross said. “There’s a lot of pressure on retailers generally, and Kmart unfortunately has lost the battle more often than not with Walmart, Target, Amazon and the likes. They’ve been at a competitive disadvantage for a long time.”
When filing for Chapter 11 bankruptcy in October, Sears Holdings announced the closing of 142 unprofitable stores, including the Kmarts in Carlisle and Hummelstown, by the end of the year. That came on top of the 46 store closings announced in August. None of those were in the region.
In 2017, Sears raised $900 million in cash by selling its signature Craftsman tool brand to Stanley Black & Decker. Whirlpool also ended its relationship with Sears in 2017.
Sears Holdings’ debt exceeded $11 billion in August.
“That’s like a national debt,” Ross said.
31 Pennsylvania stores up for sale
After filing bankruptcy, Sears Holdings offered for sale more than 500 of its stores, including 31 in Pennsylvania. On the list are the Kmarts in Chambersburg, Lebanon, Columbia, Easton, Ephrata and Elizabethtown as well as Sears stores in Camp Hill and Lancaster.
Former Sears Holdings Chairman Edward Lampert has bid $4.6 billion to buy the 500 stores, 120 distribution centers and the corporate headquarters. ESL Investments would operate it as a new company. The potential sale amounts to a "stalking horse bid" where a bankrupt debtor tests the market in advance of auctioning his assets. The aim it to get the best value before, or during, a court auction.
Sears Holdings leases the 800,000 square foot building in Chambersburg from Liberty Property Trust. Liberty bought the building in 2012 for $45 million in 2012. Ross said he expects Liberty to aggressively market the vacancy to find another tenant.
The Kmart distribution center opened in Chambersburg in 2002 with the expectation of hiring 500 people.
The Sears store at the Chambersburg Mall in Scotland closed in January 2015.
Jim Hook, 717-262-4759