WASHINGTON, Jan. 18 (UPI) -- With sales slumping and its stock taking a nosedive, Kmart's story is beginning to read more like an obituary than a legacy.
Still, some analysts hold out hope for the company that once revolutionized retail in its day, despite Moody's downgrading its debt rating to junk status.
The company continued reshuffling upper management late Thursday to staunch losses after the stock hit a 30-year low this week amid rampant rumors the corporation would be forced to file Chapter 11.
From its beginnings as Kresge and Wilson 5&10 Cent Store in 1897, Kmart grew to a leading national retail chain, one of the three biggest large-scale retailers in the country, sharing the position with Wal-Mart Stores Inc. and Target Corp. In spite of its favored position as the most established of them all, the Troy, Mich.-based Kmart is on the verge of filing for Chapter 11.
Some of the most fervent competition among the retail giants took place in the period between 1984 and the early 1990's. Kmart expanded beyond its core operations and acquired Walden Book Co., Builder's Square, Payless Drugstores, PACE Membership Warehouse, The Sports Authority, and a majority stake in Office Max as well as Borders bookstores.
From then on, it became a race for greater expansion and deep discounts.
Kmart chief rival Wal-Mart opened its first SAM's Clubs wholesale warehouses and in 1988 created the Wal-Mart Supercenter, a combination full-line supermarket and discount store.
Three years later, Kmart offered its answer to the super center concept: the Super Kmart Center. But from 1994, Kmart began reporting a loss of profits, forcing it to close more than 200 stores nationwide and sell off its shareholding in Office Max, The Sports Authority, Pace and Borders.
Since then, the company has tried several times to revamp the brand and fight their profit losses, ranging from redesigning stores called 'Big Kmart' to launching on-line shopping through BlueLight.com in 1999.
Personnel changes were made, too. In 2000, Charles Conaway was brought in as chairman to initiate an aggressive two-year retrenchment plan. Meanwhile, new alliances were forged as Kmart joined forces with Disney, Sesame Street, Joe Boxer and Martha Stewart as vendors. At the same time, the company continued to focus on price competition through its Blue Light marketing strategy that focused on price competition.
All efforts, however, were in vain. Kmart posted losses of $244 million in 2000, with a continuing drop in stock price that hit its trough Wednesday at $1.26 a share.
Under such grim prospects, it would appear at first blush that bankruptcy is a foregone conclusion for the once mighty retailer.
Yet some analysts are not so sure. Marie Driscoll, a retail analyst with Argus Research, said that despite serious structural problems, including inferior store operations, the company might be viable.
"It's a $37 billion company. I don't know that it's just going to go away," Driscoll said.
Both Driscoll and Ulysses Yannas, an analyst with Buckman, Buckman & Reid, said the company needs to capitalize on its strength, especially its brand name exclusives, to carve out a market niche between the super discount prices of Wal-Mart and the fashion-forward identity of Target.
Recent changes may be too late, many Wall Street analysts predict. For a business with such deep roots in America's consumer culture, however, Kmart's potential demise might be felt more symbolically than economically.
