UK - Kmart goes bust

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Kmart, the second-biggest discount retailer in the United States, has filed for bankruptcy protection.

Suppliers have been deserting the 105-year-old chain, which urgently needs a cash injection and has had a poor Christmas season.

In its Chapter 11 filing, Kmart said its 2,100 stores would remain open while it restructured its business.

It also said it had secured $2bn of financing.

Wall Street analysts have been tipping Kmart as a likely candidate for a Chapter 11 filing for some weeks.

The firm has been hit by weak sales and poor logistics.

Its shares have fallen to more than 30-year lows.

Its antiquated stores have found it difficult to compete with updated outlets operated by rivals such as Wal-Mart and Target, analysts say.

BBC News

-- Anonymous, January 22, 2002

Answers

Kmart v. Lexington Ins. Co., et al

Michigan Circuit Court for the County of Wayne

Dated December 30, 1999

Counsel: Howard & Howard, P.C. (Jon Steiger, Patrick McCarthy), Bloomfield, MI, Of Counsel: McKenna & Cuneo, Washington, D.C.

Summary of claim: This is a Declaratory Judgment Action. Kmart alleges that the policies at issue contain coverage for risk of physical loss which included destruction, distortion or corruption of any computer data, coding, program or software. Coverage for Kmart’s EDP media system and EDP Media is defined as "[a]ll forms of data, converted data, electronically converted data and/or programs and/or applications and/or instructions and/or media vehicles employed in the Insured’s data processing or production operations." EDP Systems is defined as "[e]lectronic [d]ata [p]rocessing [s]ystems, transferring equipment, computer systems, telecommunications systems or electronic control equipment and component parts (including, but not limited to, air conditioning systems, auxiliary generating systems, and other related power supplies)." Valuable Papers & Records, as defined, includes "micro or electronically/magnetically inscribed documents."

The policies at issue, as alleged by Kmart also contain sue and labor clauses. Kmart alleged that it incurred costs to prevent losses arising from the date recognition problem and that the policies at issue provide coverage for these costs. Specifically, Kmart alleged that (1) it is entitled to indemnification for sums Kmart has incurred and will incur relating to Y2K costs; (2) the insurers should reimburse Kmart for sums that Kmart incurred to date relating to Y2K costs; and (3) the insurers should indemnify Kmart for any additional costs and expenses it will incur in the future.

The Federation

-- Anonymous, January 22, 2002


In an attempt to compete more effectively with No. 1 retailer Wal-Mart and Target, Kmart was in the midst of a $2 billion turnaround that included improving its stores and upgrading computer systems.

Yahoo!

-- Anonymous, January 23, 2002


INVENTORY MANAGEMENT SEEN AS BARRIER TO RECOVERY

Retail profits are helped by the way a company handles the flow of goods from suppliers and warehouses to stores, and while Wal-Mart has excelled in this area, Kmart has had a tough time squeezing profits out of its supply chain, Chatterjee said.

When Charles Conaway was named chief executive officer in May 2000, he made upgrading Kmart's computer systems and supply chain a top priority. But his efforts came too late, Chatterjee said.

``He (Conaway) really couldn't do a whole lot,'' Chatterjee said. ``The organization was not set up to streamline the inventory management, which really had to be done from the ground up in the early 1980s.''

He said Wal-Mart's supply chain technology and operating systems have outdone those at Kmart since the 1970s.

WHO IS KMART'S CUSTOMER?

Yahoo!

-- Anonymous, January 24, 2002


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