NEW YORK — Kmart Corp., which has been operating in the red for the past two years, is now in the “pink.”
This story first appeared in the December 20, 2002 issue of WWD. Subscribe Today.
On Thursday, trading of shares of the bankrupt discounter moved to the “pink sheets,” the electronic quotation system. After 84 years on the New York Stock Exchange, the shares’ last trade on the Big Board was Wednesday, where it closed at 35 cents. Kmart was notified by the stock exchange in July that it was in danger of being delisted after its stock price fell below $1.
On its first day of trading under the new ticker symbol “KMRTQ.PK,” shares closed at 29 cents, down 4 cents but 14 cents above the 15 cent low it hit in intraday trading.
The move to the pink sheets should be temporary. Once the bankrupt retailer files its earnings restatements, as previously announced, it is expected to be listed on the over-the-counter Bulletin Board.
The retailer expects to file its October and third-quarter results by Monday, about a month later than originally planned. The delay in its regulatory filing with the Securities and Exchange Commission was due to the company’s earnings restatements, which it announced earlier this month.
The delay also triggered a covenant violation under the terms of its debtor-in-possession (DIP) financing facility, which requires the reporting of the monthly result within 30 days after the close of the fiscal month and, for the quarter, within 45 days. The closing date for both periods was Oct. 30. The missed deadline, however, is a nonmonetary default, and not likely to cause lenders to pull back on the credit line under the DIP facility.
Also expected on Monday will be its monthly results from November. As reported last week, Kmart’s November figures exclude sales from Thanksgiving weekend because the books closed on the Wednesday just before the holiday.
There’s been much speculation on Kmart’s holiday sales trends. In an interview here earlier this month, James Adamson, chairman and chief executive officer, acknowledged that sales in November were “soft,” but that the trend reversed during Thanksgiving weekend. The ceo said that the new Martha Stewart Holiday collection has been well-received by consumers. Also exceeding plan are sales of its Joe Boxer line, Adamson said.
How December’s overall sales will shape up remains to be seen.
Meanwhile, Kmart is pushing aggressively to grab market share, repeating its marathon hours from last year. Stores will be open from 6:00 a.m. on Dec. 20 until 8:00 p.m. on Dec. 24. All stores will be closed on Christmas and reopen on Dec. 26. The retailer said it will offer special discounts Friday and Saturday.
A healthy December would be a boost for the struggling chain. Even flat year-over-year sales for the month could be good news for the struggling chain, especially if holiday sales in general for all retailers end up showing only a small gain. That would mean that Kmart’s recent initiatives have the chain at least holding its own relative to the competition.