Kmart

Attention Kmart Shoppers! Everyone t Chances are it wasn't a great experience, or it was well over a decade ago. For many people it used to be their go-to store. The phrase, Attention Kmart Shoppers, that was a very well known phrase. Attention Kmart Shoppers! It was associated with their Blue Light Special, w At random moments the store would light up a police car type light and announce a discount for a special item. People would just hang around the store waiting for the announcement. It kept people in their store longer, it allowed them to push the merchandise they wanted to move and it did wonders in getting the Kmart name and image in everyone's heads. I would say the idea was genius and a huge success. But t Nobody's hanging around a Kmart waiting for the Blue Light Special announcement. Does Kmart even still run the Blue Light Specials anymore? You don't know do you? Kmart went from being the n So what happened? The man who started the Kmart Company was named Sebastian S. Kresge. He started the company at the end of the 19th century. In the beginning they were stores that sold products for 5 and 10 cents, w The stores were named after the founder and called Kresge. It wasn't until 1962 when the actual first Kmart opened. It was in Garden City, Mic Interesting t Jack Kerstetter is the chair for the Garden City It doesn't come as a surprise to Jack, he stopped shopping there years ago. The hall where the merchandise they had I the Kmart stores expanded rapidly and by 1977 they were responsible for almost all of Kresge Company sales, w By the late 1980s the company consisted solely of Kmart's. In 1990 the Kmart logo that we are more familiar with today came to be. Soon after they opened Super Kmart's and Big Kmart's. It was also around t In 1990 they bought the sports authority and 22% office max. In 1991 they increased their owners Though Kmart quickly sold most of its investments by 1995. In 2002 the company filed for Chapter 11 bankruptcy, that's the reorganization kind, where the company continues to exist. Well obviously. In 2004 Kmart Holdings Corporation became Sears Holdings Corporation. It sounds Kmart acquired Sears, but still called it Sears Holding Corporation. The corporate headquarters moved to Hoffman Estates Illinois. Before 1990 these were the two largest retailers in the United States. The fact that they were even able to merge Another t It's t But t Shouldn'the current logo be the one everyone's more familiar with? That brings us to 2017. The company uses t So what happened to the company? First, let's take a look at the financial state of the company. I know that looking at financial statements and SEC filings could be boring, but I already looked through them and pulled out some of the more interesting parts. Stick with me, these n Obviously there were problems even before the merger, enough to file bankruptcy in 2003 and to motivate them into the Sears merger soon after. But believe it or not, the real problems hadn't even started yet. I want to look at them starting in 2006. Kmart and Sears are now one company, so it's hard to separate Kmart from Sears at times. But here is a chart of the n And as a result of the n It's been lower every year and today it's well under half of what it was in 2006. The revenue isn't just decreasing because of the reduced n T And let's not forget that these n Let's add the single year of 1999 to the chart to compare. Yeah, so from the time of 1999 to 2006, huge decline. The time from 2006 today, huge decline. So even if you're not a professional analyst, you could probably conclude that Kmart isn't doing great. If you are a financial analyst, you're going to love t We're going to start talking about debt to equity ratios. For the select few of you who aren't analysts, let me explain what t It's a very common ratio that sounds much harder than it actually is. All it does is it takes the company's debt, If you watch Shark Tank, It's used by almost all creditors. They want the company to have low debt and Therefore, you generally want this n It varies in different industries, but a n So high n If you didn't follow that, just know that high n So let'see how Kmart is doing in these are the n Up until 2010, the n But then. . . See, t For three years, it went up. So Remember, we want n We're up to 7. 4. Then the next three years. So it turned negative. What happened? What happened is the company started having negative equity. There's another phrase that doesn't sound good. Negative equity? Well, it's as bad as it sounds. The company does not have enough money to pay off their debts. How it works is when most companies go out of business, they liquidate all their assets, take all their money from that, and pay off any outstanding debts, and then pocket the rest. If Kmart were to go out of business, they would sell all their assets, then go to pay off all their debts and find out they don't have enough to do it. And also there'd be not Just for a second, pretend your job is to decide if companies are approved for loans or not. You start reviewing Kmart and learn that they can't even pay off their existing loans. Would you grant them a new loan? T Here's their debt to equity ratio compared to that of Target and Walmart. I compare them to Target and Walmart because Kmart themselves mentioned them as big competitors in their annual report and I t When we compare these n We could take a look at their net income as well. Cause that's the bottom line, right? Well, it's bad, as we would expect, and actually negative since 2011, w I know we hear a lot of things on the news Well t Here's a statement from a recent SEC filing from Kmart themselves. It says, our The company themselves doubts that they can continue to exist based on these kind of n Kmart is soon going to be gone. Sears as well. These stores are hanging on by a thread. I can't put a time period on it, but if you ever want to visit one of these stores again, I suggest you do it soon. So what happened to Kmart? I'm actually going to answer it t It could all be brought back to one t People don't want to go to Kmart anymore. Back in the day, if you needed to run out and get an ingredient for a recipe, there's a good chance you would go straight to Kmart. If you wanted to make a major purchase, perhaps a new TV or a new kitchen set, Kmart would be the first place to look. But t Now if we need that ingredient, we'll go out to Walmart or the local grocery store. For bigger purchases, we'll go to places The internet is killing them all, but people still go to stores all the time. If I want to do some grocery shopping, I'm not going online. I'm going to the store. But I'm not going to a Kmart store. Honestly, I don't even It feels depressing. Walking into Kmart is Seriously, if you want to blast from the past and want to feel They've not updated the look or feels of their stores. As I showed you, they don't have any money to do it either. But maybe back when it was the 90s, they should have put some more focus into updating their stores and investing in themselves rather than purchasing other companies. They lost touch with the customer. They stopped caring about them. The registers they use can't be seen anywhere else. With touch screens, they still use monitors with an 8-inch screen that only displays green text. As you could imagine, these registers aren't quite as fast and leave customers waiting in line more than twice as long as any other store. The talent working the register. No offense if you work at Kmart, but you should quickly start looking for employment elsewhere. A question for anyone out there who works at Walmart or Target or somewhere Would you quit your job if given a job offer to work at a Kmart? Well, I certainly hope not. I'd hate to say it, but t And t Do you they would have to pay really well. And as we saw, they can't afford to pay really well. Now t It didn't start the problem, but it just adds to it. What does Kmart have to offer? I'd What do they have to offer? Give me a reason I would go there over their competitors. The prices aren't any better than most stores. The environment is worse. The employees are generally worse to deal with. It takes longer. They have some exclusive products So what happened to Kmart? The customer failed to come first, and the customer left. In 1990, Walmart passed Kmart to be the second largest retailer, and over the last 17 years have left them in the dust. I do remember going to Kmart when I was younger. I'm not going to lie and say it was a magical experience in the I remember it as just being another store. There wasn't much that stood out about it, but it was the place to go when you needed to buy stuff. Some people remember the stores being fantastic. The Blue Light specials were great, and when they said attention Kmart shoppers, it was exciting. But even many of these people have given up on the store. They've lost their loyalist of customers. The Kmart that they remember doesn't exist anymore, and probably won't even exist in t Here's a statement I pulled from Kmart's 2006 annual report. It says, Our success depends on our ability to differentiate ourselves from our competitors with respect to shopping convenience, a quality assortment of available merchandise, and superior customer service. In the end, I'm not so sure they followed t