Fleming Stops Shipments to Troubled K-Mart. CHICAGO (Reuters) - Kmart Corp.'s (NYSE:KM - news) plight worsened on Monday when its sole grocery supplier suspended shipments to the troubled retailer after Kmart failed to make a regular weekly payment for deliveries of food and other goods. Fleming Cos. (NYSE:FLM - news), a major U.S. distributor of grocery products, said it stopped shipments to all Kmart stores except for certain perishable food products that were already in transit. Scotts Co. (NYSE:SMG - news), a maker of lawn and garden products, also said it had halted shipments to Kmart, the No. 2 U.S. discount retailer behind Wal-Mart Stores Inc. (NYSE:WMT - news). Kmart's liquidity is being scrutinized by Wall Street amid concern that the company may be forced to file for bankruptcy. Kmart shares fell to 30-year lows last week but rose slightly to close at $1.74 on Friday on the New York Stock Exchange (news - web sites). U.S. markets were closed Monday for the Martin Luther King holiday. Kenneth Harris, a partner with food and retail consulting firm Cannondale Associates, said of Fleming's decision, ``It's a big deal. It just turns up the heat on the whole process.'' He added, ``Fleming is much closer to the pulse of the business and they're also getting paid a lot more regularly than manufacturers. Fleming is going to be much more in tune and feel the pain of not getting paid a lot faster.'' Fleming said it has submitted to Kmart a notice of failure to pay and is seeking to reclaim $78 million worth of goods already shipped but not paid for. ``Fleming is working with Kmart as they navigate through their current financial problems and we intend to resume delivery of food and other consumable products to Kmart upon receiving satisfactory assurance of Kmart's performance,'' Neal Rider, Fleming's executive vice-president and chief financial officer, said in a statement. ``We are also taking the appropriate steps to protect Fleming's interest.'' Fleming said that its business with Kmart accounts for about $4.5 billion, or about one-fourth of its total annualized revenues of about $19.5 billion. Kmart Chief Executive Charles Conaway said in a statement, ''We look forward to resuming our critical business relationship with Fleming once we work through these financial issues and are able to provide Fleming with adequate assurance of payment.'' A representative for Troy, Michigan-based Kmart could not provide further details. SUPPLIERS TAKE TOUGH LINE Dallas-based Fleming, which did not update its earnings guidance, said its seven-day payment terms for shipments to Kmart, along with its reclamation claim, put the company in a strong position to recover its receivables. It also said it was working on a so-called ``restart plan'' that will eventually allow Kmart stores to be replenished. Fleming began a 10-year exclusive-supplier relationship with Kmart in July, winning a big piece of business from its main U.S. competitor, Minneapolis-based Supervalu Inc. (NYSE:SVU - news). Jim King, a spokesman for Marysville, Ohio-based Scotts, on Monday told Reuters that his company had ceased shipments to Kmart. He said January shipments are typically low for garden products, a seasonal business that picks up again in March. ``We have right now made the decision not to make any shipments to Kmart,'' King said. ``However, this is not the period of the year in which it would be an extremely busy shipping season for us.'' Kmart shares tumbled last week after the retailer disclosed that it was in talks with its lenders about additional financing and was reviewing its liquidity position. LINK: http://dailynews.yahoo.com/fc/Business/Kmart/
I have to say that I'm not too disappointed. I never shop at K-Mart because they always seem more expensive than Wal-Mart. I used to work at a K-Mart 2 years ago and they treat their employees (especially male) like dirt. My sister work there now and that's really the only bad thing I see if K-Mart eventually falls and if they do fall you always have Wal-Mart and Target.
If K-Mart goes you can expect Wal-Mart and Target to raise prices. No competition is always a bad thing for consumers.
Can you say "selloff"? K-Mart has been in trouble for a couple of years. But this... Call your portfolio manager in the morning.
K-Mart has now filed for chapter 11. TROY, Mich. (Reuters) - Kmart Corp. on Tuesday filed for bankruptcy protection after a dismal holiday sales season and stiff competition from rivals Wal-Mart Stores Inc. and Target Corp. left the discount retailer strapped for cash. The retailer said it had secured $2 billion in debtor-in-possession financing and its 2,100 stores will continue to operate as it restructures its business. Wall Street analysts had expected the 105-year old chain to file for Chapter 11 bankruptcy protection. The Troy, Michigan-based company, which has 2,100 stores and 250,000 employees, had suffered through a series of debt downgrades in recent weeks that raised its borrowing costs. On Monday, Fleming Cos., a major supplier, stopped shipping goods to Kmart stores because the Kmart failed to make a regular payment. Moody's Investors Services also downgraded Kmart's debt on Monday to a lower ``junk'' status, saying the retailer' chances of getting outside financing were dwindling. Kmart, the No. 2 discount chain behind Wal-Mart, had been in talks with its lenders and to seek additional financing. The company's stock has been in a free fall, losing two-thirds of its value since January. The stock is currently trading around a 38-year low.
k mart sucks anyway, but now more people will be jobless and they'll go and take the job i coulda had! damnit.
I have an idea.... Perhaps Ken Lay would like to prove that he is the corporate stud he thinks he is. I propose that Ken Lay take over K-Mart and try to bring the blue light special back to life. Maybe he could call it "Kenron"
