Is it time to close Kmart?
The chain is losing money, and sales are sliding. Is there any reason for it to stay in business?
Would Sears be better off closing Kmart? At the rate things are going, the answer is yes.
Kmart is stuck in a rut. Sales at its stores open at least a year fell 3.8% over the crucial holiday shopping season, The Wall Street Journal reports. Now it has just 0.6% of the nongrocery retail market. In the first nine months of its current fiscal year, the chain posted a $98 million operating loss and saw sales slide 5.5%.
We won't know for a while whether Kmart made a profit in 2012, but it lost money on an operating basis in 2011.
The Kmart stores that I've been to are remarkably similar. They're dirty. The shelves are cluttered, yet the customers are gone. Employees are nowhere to be found.
The Journal found a similar scene at a Kmart in Manhattan, where it reported abandoned carts full of merchandise, unevenly stacked towels and unfolded pajama sets lying about. "The tile floors looked as though they hadn't been mopped in some time, and clothes were piled in the corners of the dressing rooms," Dana Mattioli wrote.
Kmart stores in New Jersey took that a step further, selling expired infant formula and over-the-counter drugs. The chain will pay more than $300,000 in fines and be subject to inspections as a result.
Kmart used to fill an important role for budget-conscious shoppers. But those customers have many more places now that can meet their needs. Dollar stores sell groceries and household necessities. Wal-Mart (WMT) has a bigger selection than Kmart, often at lower prices.
In fact, the Journal cited data showing Kmart's prices were higher than Wal-Mart's and Target's (TGT) in five out of six items it checked at all stores.
Granted, that's a pretty small sample. But if that holds true and Kmart isn't necessarily cheaper than competitors, then what is Kmart's reason for existing?
More in moneyNOW
- Abandoned no more: Schools become housing
- White Castle woos Valentine's Day diners
- Netflix shares soar on solid quarter
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
- Student loan debt climbs for 5th year in a row
- Wall Street finally notices Bitcoin
- Part-time workers hurt by on-call system
- 5 myths about late payments and your FICO scores
- Auto loan interest rates hit record low
- Should the US scrap the debt ceiling?
- Will new mortgage rules mean fewer lenders?
- Why GM, Chrysler are riding high
- Survey: Dashboard lights fail to send right message
[BRIEFING.COM] It is going to be an interesting finish to the day. In the last 30 minutes, some added buying interest pushed the Dow and S&P 500 to new highs for the session.
In the process, the S&P 500 also turned positive for the week, pretty much erasing any concerns heard as recently as yesterday that it had gone down for five straight sessions.
Now, the race is on to see if the S&P 500 can record its ninth straight winning week. It is just below ... More
More Market News
The rollout of the new national health care plan has been far from perfect, but some sectors may get an Obamacare bump.