Word: marteli
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...Mart was not amused by Hood's report, but Conaway showed some bravado in the face of the onslaught: he refused to interrupt his vacation to respond to Hood's salvo. Said K Mart spokeswoman Lori McTavish: "We're confident we have enough resources and enough lines of credit to get through. We're implementing a major change in the company's operations and culture." Other analysts were surprised only by the reaction to Hood's report, which recommended that investors sell the stock. They did, driving it to a 30-year low of $3.89 before it recovered. "This report...
...Mart is a struggling firm caught between two pricing strategies while trying to solve a complicated supply-chain problem--and hold off Wal-Mart. And you think your company has problems? During the critical Christmas season, Wal-Mart increased sales by an estimated 6%; K Mart will probably report a 2% decrease...
...Mart has long used ad circulars touting hot specials and loss leaders to draw crowds. This approach used to work well, but promotional retailing is inherently inefficient--merchandise courses through the distribution system in massive waves. Pick the wrong products or suffer a supplier hiccup, and you are suddenly up to your ears in toasters and out of detergent. Despite improvements, K Mart is able to keep its goods fully stocked on shelves only 86% of the time. Anything less than 90% is considered unacceptable. Wal-Mart runs close to 100%. Wal-Mart and others have emphasized "everyday low price...
...Mart is trying to wean itself from the weekly circulars, but in the third quarter the company cut back too fast. Some shoppers love those ads, and when the flyers didn't arrive at customers' doors, customers didn't show up at K Mart's stores. At the same time, K Mart cut prices on 38,000 items. Consumers didn't catch on fast enough, but Wal-Mart sure did, and it fired back with a vengeance. "Look at what this CEO has done!" says analyst Hale. "He's tried to go up against Wal-Mart by lowering prices...
Also in the third quarter K Mart's inventories swelled by 5.6% as sales fell. Hood estimates that for each 1% increase in inventory this year, K Mart's cash flow will drop some $40 million. That's money the company needs to continue its program to remodel old stores and build new Super K supermarket-discount stores. If K Mart had been as efficient in selling as Wal-Mart, it could have earned $200 million in the third quarter instead of losing $224 million...