CHICAGO – Kmart Corp. Thursday set July 2003 as a target date to emerge from bankruptcy, a goal analysts characterized as very ambitious for the discount retailer, which has nearly $40 billion in annual sales.
"That's incredibly aggressive for a company that large," Eric Beder, retail analyst at Ladenburg, Thalmann & Co., said. "It's possible, but it's going to require a lot of cooperation from all parties, which historically does not happen."
The Troy, Michigan-based retailer, which filed for voluntary bankruptcy on Jan. 22, also expects to complete a review of its 2,100 stores' performance for presentation to a bankruptcy judge on March 20, 2002.
"Hopefully, we'll be in a position at that time to announce what our store plan is," Jack Butler, Kmart's lead attorney for its restructuring, told a meeting of company creditors in Chicago.
Wall Street analysts have speculated Kmart will need to close as many as 500, or 24 percent, of its stores.
Kmart secured $2 billion in financing to fund its operations through the restructuring. The terms of the loan cover 27 months, which would provide the retailer with enough funding for two holiday seasons even if it cannot make the July 2003 goal, Butler said.
Retailers typically generate about one-quarter of their annual sales during November and December.
At the meeting, called to determine who will sit on Kmart's creditors' committee, Butler provided a timeline for the restructuring plan and outlined why the retailer fell into bankruptcy, among other things.
Butler said the retailer also hoped to cement its license agreements with key brands such as Martha Stewart, Sesame Street and Joe Boxer for a bankruptcy hearing on March 6.
"The company intends to pursue those agreements and put those brand matters behind us so we can form brand partnerships throughout the Chapter 11," the attorney said.
Martha Stewart Living Omnimedia Inc.'s contract with Kmart includes the option to pull its wares from the retailer's shelves in the event of a bankruptcy. Since the filing, Martha Stewart has said it intends to keep Kmart shelves stocked with its products that include linens and housewares.
Kmart, the second largest U.S. discount chain behind Wal-Mart Stores Inc. ,has said its future marketing plans will emphasize its exclusive brands.
Kmart filed for bankruptcy -- the largest ever for a retailer -- after dismal holiday sales and stiff competition from rivals such as Wal-Mart and Target Corp. left it strapped for cash.
Shares of Kmart rose 9 cents, or 6.47 percent, to $1.48 in afternoon New York Stock Exchange trading.