
enoriverbend
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As a store chain (Sears and KMart considered together), the other posters are correct, it is currently a weak competitor, but it is improving. Their gross profit margin is around 29% and net income jumped 73% in 2006.
However, the interesting thing about it is the new boss Eddie Lampert. He's an extraordinary talented man at capital allocation. If you put that together with the strengths that SHLD does have such as their extensive real estate holding, it might be an interesting company to invest in. One quite likely direction for SHLD to take is a BerkshireHathaway-like holding company, with Eddie as the next Warren Buffett. |

dreweb74
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Actually, Kmart bought Sears, not the other way around like most people thought. I do believe Kmart bought Sears in late 2004, but nothing was official until a little later on.
I'm a complete anti-WalMart, pro-Kmart guy. Kmart has a lot of problems, and it needs to start focusing on them in order to stay in business. Brand recognition is a big factor. Think Wal-Mart and what brands come to mind...ugh...Great Value? That's about all that's coming to my mind. Kmart has Martha Stewart, now Craftsman, Jacklyn Smith, Thalia, Joe Boxer, etc. However, these brands obviously aren't drawing people into Kmart like they should be. Kmart has a few problems, poor customer service, dirty stores, and old stores. Wal-Mart has been building so many super centers lately that many of its older stores are quickly being replaced. Kmart built so many of its stores in the 70s and the decade before and after, while Wal-Mart remained only a regional player (in the southern United States) well into the 80s, meaning most of its stores are much newer, yet they are still replacing them. Kmart has been remodeling stores, however I believe it's too few too late. So much money was spent upgrading stores (mainly the layout and maybe a fresh cost of pain inside) during the Big Kmart phase that I think this is something that helped contribute to their shortage of money. My point is though that changing the store layout, adding four aisles of milk, cereal, and bread and throwing a new coat of paint on the walls is not going to bring in the people and keep them. Brand new Kmart stores need to be built. Shopko, a regional retailer in the midwest, does not have super centers but appears to be fairing well. In my opinion Kmart does not have to go super center to stay in business. The Big Kmart concept was a good start, but wasn't really carried out enough. Super Kmart stores, in my opinion, were really good for the company; however financial constraints in the 90s prevented them from building too many of the stores. At least these new Super Kmart brought along cleaner, new stores. Instead of having 6 old, dirty Kmart stores in a town, maybe it would be well worth it to build 3 brand new ones and close those old 6. This would help to equal out expenses and hopefully bring in new customers creating new revenue to rebuild later on those other three stores. Kmart needs to improve customer service. The employees are just too lazy for my liking. Also when it's advertised on sale, it better ring up as on sale when you get to the register, that's one of my biggest pet peeves about Kmart: nothing ever rings up the correct price.
Does Kmart pose a threat to Wal-Mart? Nope.
Does Kmart pose a threat to Target? Nope.
Does Kmart really pose a big threat to anyone? Not really.
Back in the day Kmart was the Wal-Mart of today, however it really lost touch in the late 80s and early 90s and let time go, falling too far back to be able to catch up. Kmart is trying to play catch up, but it's going to really have to step up its game. Wal-Mart has the image of low prices, bringing in customers; Target has the image of hip and trendy, with still low enough prices, which again brings in customers. Kmart just has the dawdy image, where to go to pick up a tube of toothpaste when it's on sale, which doesn't bring in customers and keep them coming back. The customers are number one and Kmart has lost site of it. With all the money that is being generated by the company, they need to be reinvesting it into updating and improving Kmart stores, not buying out another company like Home Depot, which has allegedly been rumored.
One major advantage I think Kmart could have if it really wanted to would be to align much tighter with Sears and open up new Sears/Kmart super stores...the true super store. Having everything from your appliances to your supper. The prices would have to be low, the store clean, the customer service excellent though for this to happen. I'm afraid though it may just be too late as Kmart's reputation has been so severly damaged. Only time will tell what is going to happen to one of America's longest-living retail stores. |