Kmart Emerges from Bankruptcy

CNN ^ | 5/6/03 | Unknown Reuters correspondent

[Coop]

CHICAGO (Reuters) - Kmart Corp. officially emerges from bankruptcy Tuesday, but its vendors, lenders and investors will be watching closely over the next year to make sure the discount retailer doesn't slip back into Chapter 11, analysts said.

"They have the fight of their lives ahead of them," said Kurt Barnard, president of Barnard's Retail Consulting Group. "They still have to find a clear-cut, persuasive niche between their arch-rivals, Wal-Mart and Target."

[Coop]

Kmart actually has emerged from Chapter 11 ahead of the original schedule with little debt. That's fairly impressive given how things looked 16 months ago.

I have no doubt that some will fall all over themselves to bash Kmart, but I'm personally glad to see some positive news from this retailer. While Kmart faces a tough challenge to find its niche and stay competitive, we'll all be better off with more competitors. I have seen definite improvements at our local store since the bankruptcy filing.

[ruppertdog]

We lost two stores within 5 miles of our house, but gained a super target and super wal-mart that my wife likes a lot more. We miss the Matha Stewart and Sesame Street stuff for the young uns - those are good value brands. Unfortunately the staff wasn't helpful and check out lines were long and very slow.

[The Red Zone]

check out lines were long and very slow

I remember the real good old days, before bar code scanning appeared, when any article of clothing carried by K Mart had a special tag that had to be found, torn off, and placed in the correct slot. When someone had a basket full of clothes you could count on their check out taking a good 15-20 minutes.

[COBOL2Java]

Interesting article. I remember studying Kmart in my MBA classes, and how their management consistently chose the wrong path in their battles with WalMart & Target.

I'm glad to see them emerge from Chapter 11, and wish them the best.

[SoDak]

I shop Kmart and Target. Walmarts are increasingly annoying and dirty, and they sell a lot of weird stuff in their meat dept., stuff we feed to the dog. And God help you if you ever have to use the restroom there.

[aShepard]

Good Luck, but I think that the lights will go out for good next Spring.

[FreePaul]

I don't shop the discount stores very much but I know to stay away from any checkout line where someone has a bunch of clothes. Bar codes don't help. Some don't scan. Sometimes tags are missing. Often there are arguments about prices. A lot of clothing items have to be removed from hangers. Stay away from lines with clothing items.

My major concern with K-Mart was the discrepancy between shelf price and checkout price. Almost every time I bought an item that was marked down they attempted to charge the regular price at check out. I bought one product there several times over about six months time because the marked down price was very good. Every time I checked out I had to argue against the amount rung up on the register (full price). I complained to the manager by phone and in person always being told that they were going to correct it. Never happened. My conclusion was that this was store policy and if they could get away with it good for them. This was reinforced the last few times when the checkout clerk immediately changed the price without calling a supervisor when I raised the question.

[Nachoman]

I'm happy to see this. Now people will have a familiar place to beat their kids.

[Coop]

Given the history of retailers emerging from Chapter 11, you're not exactly going out on a limb. As the article states, this holiday season will be critical for Kmart to convince the big players and consumers that it can survive.

Interestingly, Federated Department Stores (Macy's, Bloomingdale's...) showed about a decade ago that a retailer can emerge strongly from Chapter 11. But the odds are still against Kmart. Its stock will most likely remain a penny stock through at least the Christmas season.

[TankerKC]

My wife and son just lost their jobs as our local store closed a few weeks ago. Still, we are loyal K-Mart shoppers and look forward to their return. Until then, there's a new Target going in..... ;)

[Coop]

Yeah, we prefer Kmart and Target as well. My big beef with Walmart is really because of its success. It's always so darned crowded, my shopping experience is generally hectic and annoying. I prefer Kmart because it's just less hectic and it has good prices. The local store has done a lot to clean up its aisles (one of our big beefs), and it's renovating its interior. It appears to be (just a guess here) trying to make a more attractive shopping environment.

[Wright is right!]

"When someone had a basket full of clothes you could count on their check out taking a good 15-20 minutes."

There is a segment of society that looks upon the purchase of essentials as a leisurely outing, one that should take as long as possible. This segment never has their payment ready - in fact, many appear to be surprised that payment is expected following check-em-out. Checkout is also an opportunity to engage in Socializing, an experience to be prolonged and savored.

Most of this societal segment is minority, and - to them - fast ANYTHING is a foreign concept.

Another part of this segment is the elderly, for whom going to the post office, standing in line, and taking 7 minutes once at the window to buy a stamp IS the day's field trip.

K-Mart hires from this segment and panders to it.

Michael

[msru]

We studied Wal-Mart a little in my MBA classes. Specifically, how they are extremely efficient at inventory tracking due to their investments in technology. (K-mart apparently wasn't)

[aShepard]

"Federated Department Stores (Macy's, Bloomingdale's...) showed about a decade ago that a retailer can emerge strongly from Chapter 11"......

Yeah, but they're playing in a different space .... somewhat more up-scale to fully upscale ..... that market is crowded, but not a killer like the Walmart/Target space.

Macy's has taught its audience to shop during sale events, so they are constantly have sale events, and all the soccer moms think that they're such smart shoppers because they didn't pay the inflated bust out retail prices. They can get away with this strategy as much of the inventory is somewhat specialized, and can't be directly compared to other store flyers.

Not so when you're selling Scope mouthwash, or widely distributed Chinese junk.

[Coop]

I didn't say it was the same market, but they are both retailers. And financial articles were mentioning that Kmart would need to follow the Federated model if it were to succeed.

[mombonn]

We have an incredibly good KM in my town - it has gotten even better in recent months. Hope their plans succeeds, I'd hate to lose it.

You have to hold a gun to my head to get me into WalMart. Yuck!

[Coop]

K-Mart hires from this segment and panders to it.

Hey, thanks for coming! I was starting to get worried because nobody had posted some ridiculous statement regarding the Kmart chain. I thought you guys had taken the day off!

[yarddog]

I am not very fond of Wal-Mart or K-mart.

I do hope K-mart survives just so they can give Wally World some competition.

I stopped at a K-mart yesterday for probably the first time in a year. From what I saw, they are in real trouble.

My wife told me to get a new micro-wave. I noticed Wal-Mart has a Panasonic 1300 Watt for just over $70.00. K-mart did not come close to that value. The K-mart store was clean and well lit with enough employees. The real problem is their prices are too high. I also wanted some motor oil but simply couldn't find a good price. I think due to their financial problems, K-mart simply can't purchase their stock at the same prices as Wal-Mart which means they can't sell for as low either.

[SoDak]

We also have stores here called Shopko. I'm not certain how widespread they are, but I like shopping there for some items too.

[Wright is right!]

"Hey, thanks for coming! I was starting to get worried because nobody had posted some ridiculous statement regarding the Kmart chain. I thought you guys had taken the day off!"

We were off yesterday due to the violent weather in TN, but we're back today.

I base my feelings about kuh-Mart only upon my own experiences and what I have read from reliable sources. Kuh-Mart's reputation for surly, slow workers is not in MY mind, it's in the article. And every Kuh-Mart I've ever been in has employees that have directly contributed to the problemos that led the chain into Eleven. The chain is not efficient, and I've seen no indication that they tend to hire efficient workers. They do have a substantial store presence in Inner City neighborhoods, and they hire from th' hoods. The Kuh-Mart store about 2 1/2 miles from here is in a pleasantly diverse area, but its staff is 99% "minority." While the nearby Wally World will open up additional checkout lanes when the wait gets to 3 deep at a register, Kuh-Mart is the opposite. They hope that a long wait will mean that you will buy some of the stuff they've piled up in the checkout lines.

Ridiculous statements? Hardly.

Michael