Little Caesars co-brand relationship with bankrupt Kmart remains uncertain

March 19, 2002

Despite seeing its co-branding partner, Kmart, file for bankruptcy protection on Jan. 22, a Little Caesars spokesperson says the pizza chain has no plans to change its relationship with the stumbling house wares giant.

The Detroit-based pizza chain does not disclose store numbers, but it's estimated that its co-branded outlets in Kmarts total in the low hundreds. If Kmart moves to close stores to reduce its cash outflow, as is widely speculated it will, the future of those Little Caesars express units could be in jeopardy.

"It's pretty soon to say anything about the situation," said Lisa Cosnowski, spokesperson for the world's number-four pizza chain. "I really don't know what lies ahead for us and K-Mart."

According to a report in the Wall Street Journal, Chapter 11 status provides for a ceiling on the liability to debtor companies for walking away from real-estate leases. Kmart, analysts believe, may have to close as many as 500 underperforming stores -- about 25 percent of the total chain -- to reduce its lease burden to a manageable size.

How many of those stores have Little Caesars outlets in them is not yet known.

Still Cosnowski said the company remains optimistic about the days ahead for the four-decades-old discounter.

"I will say that we still have a great business partnership with (Kmart), and we'll continue to stand by them during this time and in the future," Cosnowski said.

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