US discounter Kmart is considering abandoning its native Michigan for Georgia in the latest cost saving initiative at the restructured retailer.

According to local press reports, Kmart has been scouting potential HQ locations in the southern state, where operating costs would be lower.

Any move is likely to result in redundancy for 80 per cent of its 2,200 Michigan staff.

Earlier this week, Kmart surprised analysts by announcing its first store refurbishment programme since emerging from Chapter 11 last year.

It will convert about 20 stores into locally tailored formats, with features such as wider aisles, improved layouts and a lime-green colour scheme.