NEW YORK (CNN/Money) - Kmart Corp. ousted CEO Charles Conaway Monday and replaced him with Chairman James Adamson as part of an executive shakeup to help pull the discount retailer out of Chapter 11 bankruptcy. The change comes two days after Kmart said it would slash 22,000 jobs and close 284 stores.

Conaway said in a statement he decided to resign after contemplating his family needs and professional goals.

"He felt that he was not fired. He felt that this was in the best interests of the company," Kmart spokesman Jack Ferry said of Conaway.

Kmart (KM: up $0.08 to $1.37, Research, Estimates) stripped Conaway of the chairman post in January, handing it to Adamson after the company was forced to file for bankruptcy protection because of competition from Wal-Mart and Target, steadily declining sales and a dismal holiday season.

Adamson said Monday that the company's main priority is to make sure the stores are once again fully stocked and to improve customer service as it works through its bankruptcy reorganization.

"I'm very energized but, I also recognize the enormity of our challenge," Adamson told reporters during a conference call Monday.

Adamson said the stores are back up to 90 percent in-stock levels after negotiating new terms with vendors through the bankruptcy court, but that there still is "a long road to go."

Kmart has said it expects to unveil its new focus by the end of summer.

Adamson, 54, is a 25-year retailing veteran, holding executive positions at Target stores, B. Dalton Booksellers and management positions at Gap stores. However, it is his role as the former chairman, president and CEO of Advantica Restaurant Group Inc., parent of Denny's, that may have grabbed Kmart's attention.

Part of Kmart's strategy in the last few years has been to build up its in-store groceries through its relationship with food distributor Fleming Cos. However, that relationship has become strained by Kmart's flagging performance.

"We've got to stabilize the relationship with Fleming," Adamson said.

That partnership, along with those with other key brands such as home decor maven Martha Stewart, Disney and Sesame Street, could prove crucial to the success of any turnaround, analysts have said, as Wal-Mart already has established itself as the undisputed low-price leader and Target successfully draws a slightly more upscale, fashion-conscious customer.

Adamson said Monday that Stewart, chairman and CEO of Martha Stewart Living Omnimedia, one of Kmart's most valuable licensees, has taken an active role in helping to shape the company's future.

"Martha has been a terrific partner. I've gotten to know her well of late," Adamson said. "I can only see her strengthening her relationship with us...I counsel with Martha. She's constantly helping me search out ideas."

On Friday, Kmart announced plans to slash 22,000 jobs and shutter 284 stores, for which it would take a $1.2 billion charge for one-time costs, saving it $550 million this year and $45 million annually after that.

The company, which had about $37 billion sales last year, also plans to dispose of more than $1 billion in inventory through store-closing sales, the company said.

Conaway's severance package is scheduled to be approved at an April 24 hearing in U.S. Bankruptcy Court, Ferry said.

Critics blamed Conaway for trying to combat Wal-Mart, the world's biggest retailer, by competing head-to-head on low pricing, a nearly impossible feat for Kmart, which does not command nearly as favorable vendor terms and sales volume as Wal-Mart. However, Conaway has been praised for slashing costs and inventory, and improving store execution, moves analysts said were long overdue.

"I think Conaway is a good retailing executive, but he made too many mistakes at the very beginning of his tenure at Kmart," said Kurt Barnard, president of Barnard's Retail Consulting Group. "It is quite possible that his background and length of experience did not sufficiently qualify him for the immense job he was taking on."

Additionally, Kmart replaced Chief Financial Officer John McDonald, whom Conaway hired last November, with turnaround specialist Albert Koch, chairman of Jay Alix & Associates, a leading turnaround firm. Ted Stenger, also of Jay Alix, was named treasurer. McDonald is leaving the company.

Kmart also appointed Julian Day as its new president and chief operating officer. Day is the former chief operating officer of Sears Roebuck & Co.

"We are very fortunate to be able to draw upon Jim Adamson's many talents and experiences at this time of transition at Kmart," Thomas Stallkamp, a Kmart director, said . "Now that the company has taken the difficult, but necessary actions to stabilize its finances and operations, he is the right executive to move Kmart forward."