Kmart and Sears: Still Stuck In The Middle?
On January 22, 2002, Kmart Corporation became the largest retailer in U.S. history to seek bankruptcy protection. Kmart management said that they would outline a plan for repaying Kmart’s creditors, reducing its size, and restructuring its business so that it could leave court protection as a viable competitor in discount mass-marketretailing. Emerging from bankruptcy in May 2003, Kmart still lacked a business strategy to succeed in an extremely competitive marketplace. Out of bankruptcy, Kmart became profitable primarily by closing or selling (to Sears and Home Depot) around 600 of its retail stores. Management had been unable to invigorate sales in its stores. Declared guilty of insider trading, Martha Stewart went to prison just before the 2004 Christmas season. In a surprise move, Edward Lampert, Kmart’s Chairman of the Board and a controlling shareholder of Kmart, initiated the acquisition of Sears by Kmart for $11 billion in November 2004. The new company was to be called Sears Holdings Corporation. Even though management predicted that the combined company’s costs could be reduced by $500 million annually within three years through supplier and administrative economies, analysts wondered how these two struggling firms could ever be successful. Sears Holdings Corporation is the leading home appliance retailer as well as a leader in tools, lawn and garden, consumer electronics and automotive repair and maintenance in United States. Its key brands includes Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has the Country Living collection, which is offered by Sears and Kmart in 2011. It is the ninth largest retailer by annual revenue in the United States trailing behind Wal-Mart, The Home Depot, Costco, Target, CVS Caremark, Walgreens, Kroger, and Lowe's in 2009. It is...
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