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?

By Kim Peterson Jan 24, 2013 6:28PM
Pedestrians pass a Kmart location in New York ( Frank Franklin II/AP Photo)Sears Holdings (SHLD) is trying to fix its operations and has made some progress along the way. But the company is being dragged down by Kmart, raising questions about whether that discount chain's time has come and gone.

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

793Comments
Jan 24, 2013 7:31PM
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kmart ceo and board members  just knows how to run a company to the ground  while getting overpaid to do it
Jan 24, 2013 8:21PM
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I want to like my Kmart. I make it a point of going in there primarily because i don't want "the evil empire that is Walmart to be the only choice I would have in our small town I Kmart closes its doors. But every thing in the article is true. Its dirty, customer service is either poor or non existent.

I don't want them to go away. Prices jumped at Walmart the next town over once that area's Kmart shut its door... heard that from a Wally World employee themselves. If only they could straighten up their act...


Jan 24, 2013 8:08PM
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I miss the Blue Light specials they use to have years ago
Jan 24, 2013 8:41PM
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I don't think we gave up on Kmart as much as Kmart gave up on us. Have you been to a Kmart lately? They are dirty, disorganized, understaffed, poorly stocked, beat-up old stores that haven't been remodeled in 30 years. It doesn't matter how low the prices are, the stores are a DUMP. Why would anybody shop there? 
Jan 24, 2013 7:44PM
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Just a few months I went to Sears store to buy a Vacuum  which was out of stock so I just drove to K Mart they had the same Vacuum but would not sell it to me for the same price as Sears is it any wonder why these two stores are in the shape they are in.Just in case the CEO's do not know it they are the same.
Jan 24, 2013 8:09PM
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used to love this store, not anymore..wrong prices, low stock, horrible customer service...even online or by phone, you cant get a straight answer... if you even get someone to answer the phone..sad
Jan 24, 2013 8:30PM
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That is so sad......when I was a youngster, Kmart was fun shopping. We didn't have much - the clothes we usually got were hand-me-downs or Good will, unless we had enough, we got to buy some clothes and tennis shoes at K-mart; loved their sub sandwiches - 3 for $1 - the blue light specials - they had everything there and we would spend hours there. Back then, it was the store for us.
Jan 24, 2013 7:50PM
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Funny, that they can't leverage their real estate holdings to hold costs down from operating expenses to prices for consumers.  Corporate salaries should be commensurate with how well a business is doing.  Not like Hostess where a company is run into the ground and CEO's and higher management come out with a ton of money after bankruptcy.
Jan 24, 2013 7:52PM
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I love K Mart! Don't close it . I was sad when all the Kmarts closed in my town, but then I moved to another city and there was K Mart again! I moved from Maui in 2008 to Sacramento California and had to purchase appliances and furniture right away. I did not have a lot of money to spend but was able to buy a refrigerator, a washer and dryer and a dining table with all the chairs and a matching bench. That was actually in Rancho Cordova Ca. on Sunrise Blvd. Everyone who works there is fantastic and so helpful and respectful. I purchased my television at Sears and clothing for my family has always been a Sears or Kmart purchase.  K Mart is one of the best bargains anywhere with quality products...maybe they should open a grocery store within them to entice more shoppers to just make one stop shopping at Kmart the way to go!
 
Jan 24, 2013 7:27PM
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Why didn't anyone ask this question about GM?
Jan 24, 2013 8:28PM
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NOOOO i love Kmart everythng im looking for is there i live in the west area in Puerto Rico that is the best store i dont like walmart :( :( :(
Jan 24, 2013 8:29PM
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Kmart and Sears are one in the same and personally I say close them all! Their prices are ridiculous and the customer service is awful. Too bad, cause Sears used to be a great store to shop at. And their Craftsman tools are garbage now. Made in China! Bye bye Sears/Kmart.

 

Jan 24, 2013 8:27PM
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Price points are higher in K Mart than Walmart, that's a no brainer... I can purchase a comperable or same item at Walmart for less money..  Mens clothing lines in Sears and K Mart are awful, high prices for low quality, very little style.

Change your business practice or else Good Bye K Mart

Jan 24, 2013 8:33PM
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I don't know how they stayed open this long.  Detroiters came in to this suburbia store and steals it blind!  At least twice a week they are arresting someone for theft.  Women are being jumped in the parking lot.  Cars are being stolen all of the time.  I don't feel comfortable shopping at the store that I shopped in all of my life anymore.  
Jan 24, 2013 7:54PM
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Where will I get my socks and underwear?
Jan 24, 2013 7:52PM
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the Kmart that was up here in the suburbs was great - they closed it and now it's a Lowe's, and the only one in town is in a bad area of town; perhaps the powers that be ghettoized it into a nonviable option?
Jan 24, 2013 7:35PM
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first, it's penneys, then its sears, then k-mart.......Wait, maybe it's time to close down MSN on second thought I like the free entertainment MSN offers.
Jan 24, 2013 8:27PM
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kMART IN HAZLET, NJ IS JUST FILTHY--TOTALLY DISORGANIZED AND NO EMPLOYEES AROUND TO ASK FOR HELP---SHUT IT DOWN, IT'S A DISGRACE!!!

Jan 24, 2013 8:37PM
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I worked for Kmart from 1965 to 1990 during the time of growth and profits. Stock split multiple times during the first 10-15 years.  Store managers ran their stores with a certain amount of freedom to order and sell what their customers wanted.  The Kresge/Kmart  Spirit was offer the quality goods at a fair price, give customers service and then make the checkout process convenient and pleasant.

As the company got bigger, the bean counters took over and the merchant managers were ignored. Financial analysts advised that the stores needed to appeal to a higher income customer and displays reflected that along with higher priced goods that chased the lower income customer away..

Then, the president started looking at Wal Mart(then far behind in sales) worrying that they would catch Kmart. We started to copy Wal Mart but also pressure was put on payroll year after year. Move ahead  a few years and the then president decides that managers are getting older and are being paid too much.  Demotions and firings then led to low morale among those that were left.  Experienced managers that knew the cycles of sales were gone and HQ then controlled everything. 

If you don't have customer service, you have nothing.  Fewer employees led to poor service, empty shelves, dirty stores and fewer and fewer sales.  No sales, no profit.

RIP Kmart but keep the pension coming.
Jan 24, 2013 7:40PM
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K-mart is dead.  Sears is dead.  who cares.  if you haven't pulled your stock out by now, you're dead!
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