Kmart stores in Gallery, Northeast to close

Kmart at the Gallery during the holiday season. There is more than one plan on how the space could be used in the future.
Kmart at the Gallery during the holiday season. There is more than one plan on how the space could be used in the future. (SUZETTE PARMLEY / Staff)
Posted: January 25, 2014

Kmart stores in the Gallery and Northeast Philadelphia will close in late April, the company said Thursday.

Liquidation sales will begin Feb. 9.

Employees at the Gallery store were told Thursday that the stores would close.

But rumors had been rampant for months, and the smell of closure had already settled in.

Following the holidays, the Gallery store had been looking sparse, with Christmas decorations and seasonal merchandise cleaned out but not replaced.

The Gallery store has 120 employees and the Kmart at 900 Orthodox St. has 169, some of whom will receive severance pay and will be able to apply at other Kmart and Sears stores. Sears Holdings Corp. owns both chains.

The Gallery store is closing amid speculation that a long-awaited retail revival on Market Street East may be closer to fruition.

In October, the Pennsylvania Real Estate Investment Trust (PREIT) spent $60 million to buy the Kmart anchor location at Ninth and Market Streets, the store that awkwardly divides the Gallery in half.

The acquisition gave the Center City company, which also owns Cherry Hill Mall, control over the entire Gallery. At one point, the Gallery had three different owners.

A Gallery makeover is imminent, PREIT's chief executive, Joseph Coradino, promised last summer, speaking to a Chicago gathering of the National Association of Real Estate Investment Trusts.

Coradino said there were two plans.

One - for a high-end fashion complex - depends on landing an anchor tenant such as Bloomingdale's, to be housed, perhaps, in the former Strawbridge & Clothier store at Eighth and Market Streets.

The alternative would be a "Fast Fashion and Food" concept, he said, with well-known trendy tenants such as H&M and Forever 21.

Kmart and Sears Holdings have been struggling, as year-to-year comparisons of sales in both Sears and Kmart stores have declined, according to company financial reports. Holiday sales were underwhelming.

The companies have been announcing store closings around the nation and this week made headlines by saying that Sears' flagship store in Chicago would close. The company is headquartered outside Chicago.

"Store closures are part of a series of actions we're taking to reduce ongoing expenses, adjust our asset base, and accelerate the transformation of our business model," spokesman Howard Riefs wrote in an e-mail.

"These actions will better enable us to focus our investments on serving our customers and members through integrated retail - at the store, online, and in the home," he wrote.

Most workers at both stores are part-time and hourly, Riefs wrote.

Sears, which began as a catalog company, has told analysts that it is moving toward online sales and away from brick-and-mortar retail.



Inquirer staff writers Maria Panaritis and Joseph N. DiStefano contributed to this article.

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