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Wednesday, October 24, 2012

Kmart's Store

Second quarter sales for 2002 were $7.5 billion, a 15.6 percent drop from the same time period in 2001. According to Yue (Summer slump getsa, 2002), Kmart has not seen quarterly sales that low since the first quarter of 1998. Kmart has not posted a quarterly profit since the fourth quarter of 2000. Most significantly, sales results for stores open for at least (the traditional measure of a retailer's performance) were down 13.9 percent in July and 11.9 percent in August 2002.

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Kmart has also decided to eliminate its e-commerce division, BlueLight.com. Yue (Kmart to pull outa, 2002) reported that Kmart has elected to divest itself of this entity in order to focus on its stores and the core competencies of the company. Operating an ISP is not a core competency for Kmart. Kmart paid more than $3 million to buy BlueLight.com and hopes that it will at least recoup that cost when the sale of the entity to NetBrands Inc. goes forward.

Kmart will continue to operate www.kmart.com, a site that has never posted a profit. The sale of BlueLight.com is dependent on an auction scheduled for October 7, 2002 and bankruptcy court approval of Kmart's choice on October 30, 2002 (Yue, Kmart to pull outa, 2002).

David Ghitelman (2002) contends that Kmart is taking aggressive steps to ensure that its bankruptcy reorganization will succeed. What the company needs to do and is in the process of doing is focu


A staffing cost reduction of $66 million for 2002 and $130 million annually thereafter

Since filing for bankruptcy, Kmart has continued to battle sales declines as it attempts to formulate a new corporate level strategy and to implement business level strategy shifts such as described above. At the corporate level, Chief Executive Officer Jim Adamson identified a number of specific moves as part of the company's reorganization; it should be noted that these strategic and organizational shifts are what is needed at both the corporate and business levels of strategy to return Kmart to a viable position in its market.

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