Kmart Corporation is an American retail company that owns a chain of big box department stores. The company is headquartered in Hoffman Estates, Illinois, United States. The company was incorporated in 1899 as S. S. Kresge Corporation and renamed Kmart Corporation in 1977.
The first store with the Kmart name opened in 1962 in Garden City, Michigan. At its peak in 1994, Kmart operated 2,486 stores globally, including 2,323 discount stores and Super Kmart Centre locations in the United States. As of April 16, 2022, that number was down to nine, including just three in the continental states.
From 2005 through 2019, Kmart was a subsidiary of Sears Holdings Corporation and has continued to decline. Since 2019, Kmart has been a subsidiary of Transform SR Brands LLC, a privately held company that was formed in 2019 to acquire assets from Sears Holdings.
What Happened to KMART? Learn from the Below Videos
In October 2018, Kmart’s parent company, Sears Holdings, filed for bankruptcy. Kmart first filed for bankruptcy in 2002, making this its second time in just 16 years. However, the struggling company used to be the biggest discount retailer of Home Goods in the U.S. — even bigger than Target and Walmart.CNBC
Kmart’s Profitability and Sales Peak and then Decline
Sales and Profitability peaked in 1992, and have since declined due to competition with Walmart, Target, and internet shopping.In 1994, Kmart announced they would close 110 stores. Unlike its competitors Walmart and Target, Kmart failed to invest in computer technology to manage its supply chain. Furthermore, Kmart maintained a high dividend, which reduced the amount of money that was available for improving its stores. Many business analysts also faulted the company for failing to create a coherent brand image.
In September 1995, Kmart sold its money-losing in-store auto repair centres to Penske Corporation for $112 million to operate them as Penske Auto Centres. Penske later closed the auto repair centres in 2002 as a result of a payment dispute with Kmart.
The Launch of KMART Cash Card
In 1997, Kmart launched the Kmart Cash Card as a replacement for the paper gift certificates and to facilitate the return process. In July 1999, Kmart hired SuperValu and Fleming to distribute $3.9 billion worth of food and other related products to all Kmart stores.
From 1999 to 2000 Kmart converted 150 regular Kmart stores into Big Kmart stores during the first half of 2000.In 2000, Kmart and Capital One launched an all-new co-branded MasterCard as a replacement for the private label Kmart credit cards. Also in 2000, Kmart expanded the Martha Stewart Everyday Garden Collection to include live plants and seeds. Kmart also launched the Martha Stewart Everyday Kitchen, which is a complete line of housewares essentials.
72 Underperforming KMART Stores Closed in July 2000
In July 2000, Kmart closed 72 underperforming stores due to poor sales, while opening 20 new Big Kmart stores, converting 12 regular Kmart stores into Super Kmart Centre stores, and opening 5 new Super Kmart Centre stores.and the company announced a planned major restructuring, in which Kmart would invest in new customer check-out and new inventory management technology and other related systems as well.
Why KMART Failed so horribly?
In this video the epic rise and fall of Kmart is discussed. Kmart was once the second largest department store in US with over 2,000 locations. But competition from Walmart and later Amazon caused their business to decline precipitously. They filed for bankruptcy twice and there are currently only 17 stores left in operation.Wall Street Millennial
KMART Files for Bankruptcy
On January 22, 2002, Kmart filed for Chapter 11 bankruptcy protection under the leadership of its then-chairman Charles Conaway and president Mark Schwartz. Conaway, who successfully expanded CVS Corporation, accepted an offer to take the helm at Kmart along with a loan of $5 million.
Downfall of KMART Chairman, Charles Conaway
In a scandal similar to that involving Enron, Conaway and Schwartz were accused of misleading shareholders and other company officials about the company’s financial crisis while making millions and allegedly spending the company’s money on airplanes, houses, boats and other luxuries. At a conference for Kmart employees on January 22, Conaway accepted “full blame” for the financial disaster.
As Kmart emerged from bankruptcy, Conaway was forced to step down, and was asked to pay back all the loans he had taken. After dismissing Conaway and Schwartz, Kmart closed more than 300 stores in the U.S., including all the Kmart stores in Alaska, and laid off around 34,000 workers as part of the restructuring process.
While Kmart was going through bankruptcy, a significant amount of Kmart’s outstanding debt was purchased by ESL Investments, a hedge fund controlled by Edward Lampert. Lampert worked to accelerate the bankruptcy process. On January 13, 2003, Kmart closed 326 stores due to a lack of profitability and poor sales.
KMART Purchases Sears in 2004
On November 17, 2004, Kmart’s management announced its intention to purchase Sears for $11 billion. As part of the merger, the Kmart Holding Corporation (the company that owns Kmart) would be transferred to the new Sears Holdings Corporation and Sears would be purchased by the new Sears Holdings Corporation. The new corporation announced that it would continue to operate stores under both the Sears and Kmart brands.
In 2005, Sears Holdings Corporation introduced the Sears Essentials store format, which would serve as a Kmart-Sears hybrid. Sears Essentials stores were freestanding (not located at a shopping mall) stores. In 2006, the company discontinued the Sears Essentials name, and renamed all of the Sears Essentials stores as Sears Grand stores.
KMART Store Closures Continue from 2011 to 2018
On December 27, 2011, after a disastrous holiday sales season, Sears Holdings announced that 100 to 120 of Sears and Kmart stores would close. In 2014, news reports indicated that Kmart was liquidating dozens of stores across the United States.
Kmart’s parent company, Sears Holdings Corporation, underwent financial distress throughout the year, sparking an unspecified number of closings of Sears and Kmart locations amid vendors’ and lenders’ concerns about its liquidity.
Along with store closings, measures included the spinning off its Lands’ End division, selling most of its stake in Sears Canada, issuing debt and taking on loans that cumulatively put it on track to raise $1.445 billion in cash in 2014.
“Store closures are part of a series of actions we’re taking to reduce on-going expenses, adjust our asset base and accelerate the transformation of our business model.”Howard, Riefs, Spokesman, KMART
In April 2016, Kmart announced that it was liquidating 68 stores. Sears Holdings CEO Eddie Lampert stated in October 2016 that there were not and never had been plans to close the Kmart format and that they are working hard to make it a “more fun, engaging place to shop, powered by our integrated retail innovations and Shop Your Way”. However, In December 2016, at least 25 Kmart locations were targeted for closure in early 2017.The Closure of Stores Continued until October, 2018 across the nation.
KMART’s Parent Company, Sears Holdings files for 2nd Bankruptcy in 2018
On October 15, 2018, Sears Holdings filed Chapter 11 bankruptcy and announced that it would close 142 stores, including 63 Kmart stores. Sears Holdings’ bankruptcy also marked Kmart’s second bankruptcy in 16 years. On November 23, 2018, Sears Holdings released a list of 505 stores, including 239 Kmart stores, to be presented for sale in the bankruptcy process while all other stores were holding liquidation sales.
However, the stores for sale were not guaranteed to be protected from liquidation in the future. In a proposal announced in early January, Sears Holdings planned only to keep 202 Kmart stores along with 223 Sears stores open, assuming that it would survive the bankruptcy process.
In late 2019, the massive closure of 120 Kmart stores was announced. In November 2019, Kmart announced the closing of 45 stores in February 2020. As of April 16, 2022, only 9 stores remain open, three of them being in the Contiguous United States.
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