K-Mart Bankruptcy

Kmart bankruptcy

Kmart is an American chain of discount stores headquartered in the United States. The chain purchased Sears in 2005, forming a new corporation under the name Sears Holdings Corporation. The company was founded in 1962 and is the third largest discount store chain in the world, behind Wal-Mart and Target, with stores in the United States, Puerto Rico, the U.S. Virgin Islands, and Guam. As of February 2, 2013, Kmart operated a total of 1,221 Kmart stores in 49 states, Guam, Puerto Rico, and the U.S. Virgin Islands. This store count included 1,196 discount stores, averaging 8,700 s.q.m, and 25 Super Centers, averaging 15,600 s.q.m.

Kmart’s success was based on two main strengths: buying power and brand awareness. First, the size of the company allowed it to buy goods cheaply and in bulk. Or more than a decade, Kmart had over 30 billion in net sales and contracted with over 4,000 merchants.

Like all good things, Kmart’s rise to power eventually came to an end. Kmart’s demise was caused by three main factors. First, Kmart failed to develop a consistent company philosophy. Second, Kmart developed a corporate culture with low levels of management accountability and high levels of compensation. Third, Kmart was simply unable to compete with Wal-Mart. In particular, Wal-Mart bested Kmart with superior supply chain development and management, revenue, and product turnover.

One of Kmart’s central problems was the lack of a coherent corporate philosophy. In the early 2000’s, Kmart was awkwardly positioned between Target, which was known for reasonably priced style, and Wal-Mart, which was known for rock bottom prices. In an attempt to compete on a different plane, Kmart experimented with investments in other companies, such as Office Max, Walden Books, and Sports Authority.15 However, Kmart did not develop these assets, and soon abandoned its investments.

In 1988, Kmart spent $0.231 in overhead for every dollar earned, but Wal-Mart only spent $0.163. Naturally, this allowed Wal-Mart to have lower prices and higher profits. In part because of lower pricing, Wal-Mart was able to outgrow Kmart.2 In 1988, Kmart spent $0.231 in overhead for every dollar earned, but Wal-Mart only spent $0.163. Naturally, this allowed Wal-Mart to have lower prices and higher profits. In part because of lower pricing, Wal-Mart was able to outgrow Kmart.2 Even if Kmart would make the necessary cuts, it still lacked the facilities needed to generate the necessary sales and could not afford to build new stores.

In an effort to restore the fortunes of the company and find a way to compete with Wal-Mart, Kmart hired Charles Conaway as the new CEO. To implement Conaway’s new plan, Kmart began the “blue-light always” campaign.

Conaway decided that Kmart should return to its roots and become the nation’s number one low-priced realtor. To implement this plan,

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