Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Paint The Table -- Ignore unavailable to you. Want to Upgrade?

To: AugustWest who wrote (10359)	1/16/2002 11:23:56 AM
From: Original Mad Dog	Respond to of 23786

Beer (or wine) and pizza is actually excellent breakfast food. You might try a couple of Krispy Kremes as a chaser.

To: AugustWest who wrote (10359)	1/16/2002 11:37:18 AM
From: MulhollandDrive	Respond to of 23786

Remember our KM/TGT/WMT conversation?? Down about 38% right now.. Kmart Board Meets, Bankruptcy Possible dailynews.yahoo.com Tuesday January 15 12:49 PM ET By Anna Driver CHICAGO (Reuters) - The Kmart Corp. (NYSE:KM - news) board of directors met on Tuesday to discuss financial options, possibly even bankruptcy, as the stock of the discount retailer again fell sharply on worries over its efforts to match the low prices of rival Wal-Mart Stores Inc. (NYSE:WMT - news). The nation's second-largest discount retailer has said that it may need additional financing from banks after months of weak sales, especially over the crucial Christmas shopping season. ``I'm not surprised the board is meeting,'' Kurt Barnard, president of Barnard's Retail Consulting Group, said. ``If they don't get the credit, the only solution I can see is a Chapter 11 (bankruptcy).'' Calls to the company, whose history dates back to 1897, were not immediately returned. Since the beginning of the year Kmart stock has lost half its value. Kmart has been losing market share to rivals Wal-Mart and Target Corp. (NYSE:TGT - news). Shares of Kmart, which is expected to report a loss for its fiscal 2001 year, fell 39 cents or 13.73 percent to $2.45 on the New York Stock Exchange (news - web sites) in midday trading. The stock started its decline when Moody's Investor Services downgraded the Troy, Michigan-based retailer's debt to ''junk'' status in December. Troubles were compounded when Prudential Securities retail analyst Wayne Hood suggested the company may file for bankruptcy if its fortunes do not improve. The retailer, in the middle of a $2 billion restructuring, also said it was reviewing its business plan for 2002 and 2003. On Monday, Standard & Poor's cut Kmart's senior credit and debt ratings. S&P, which also warned of further downgrades, cited worries that the retailer's financial flexibility is eroding and its suppliers are losing confidence. PRICE CUTS SLASHED PROFITS AT KMART When Chief Executive Charles Conaway took office in June 2000, he unveiled a wide-ranging turnaround plan to battle Target and Wal-Mart by improving the company's flow of goods from warehouses to stores and enhancing customer service. Conaway also has cut prices on some 40,000 common household products like food under a ``BlueLight Always'' marketing campaign that drew on its popular ``Blue Light Special'' promotions. But the new discounts and an accompanying cut in the retailer's advertising budget failed to generate sufficient sales to boost profits. In its fiscal third quarter, Kmart reported a net loss of $224 million. One Wall Street analyst said that Kmart never should have tried to compete with Wal-Mart on price because Wal-Mart is able to squeeze enormous efficiencies from its infrastructure and sheer size. Wal-Mart is the world's largest retailer. ``A major mistake that Conaway made was to advertise lower prices rather than to advertise the strength of their brands like Martha Stewart and Route 66,'' Ulysses Yannas, retail analyst with Buckman, Buckman & Reid, said. Kmart sells housewares under the label of the guru of home entertainment, Martha Stewart. During the U.S. economic recession, both Target and Wal-Mart have seen sales rise at their discount stores as consumers, wary of job cuts and volatile stock markets, looked for value. But Kmart was unable to lure enough customers in the shrinking economy. STORE CLOSURES ONE OPTION Some analysts expect that Kmart will be forced to close a large number of its 2,100 stores in a bid to cut costs. ``We continue to believe that a meaningful downsizing of Kmart's stores base, possibly involving 200 to 400 stores, is possible and necessary and could help put the company on firmer footing down the road,'' Richard Church, a retail analyst at Salomon Smith Barney, wrote in a research note on Tuesday. Most agree, however, that the retailer needs to take some quick action to reassure its vendors. Large suppliers including Procter & Gamble Co. (NYSE:PG - news), Fleming Cos Inc. (NYSE:FLM - news) and bankrupt underwear maker Fruit of the Loom have all said in recent days that Kmart is paying its bills on time so far, but as the debt and credit downgrades pile up, worries build. ``A variable that may be posing more risk to Kmart than we had judged originally, however, is the level of support Kmart is receiving from its vendors,'' Salomon's Church wrote. The analyst said that while initial responses from vendors were mixed through Friday, the ``tone yesterday appears to have worsened.''