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Kmart Holdings Corporation and Sears Roebuck and Company Merger
Several reconfigurations and joint efforts with various fashion labels such as Disney, Joe Boxer, Fleming foods, and Martha Stewart lead Kmart Holdings Corporation to file for reorganization under Chapter 11 of the U.S. Bankruptcy Code. This included and lead to the closing of a total of 599 stores and 1 distribution center over the next year (Kmart Holdings Corporation, 2004). Emergence from Chapter 11 in 2003, lead the corporation to begin trading common stock on NASDAQ (KMRT) (Kmart Holdings Corporation, 2004). Due to the following imposed actions, selling underperforming stores, raising prices, and limiting capital expenditures Kmart still reported a third quarter net loss in October 2004. Share values were notably below 15% in the 12 months before November 2004 (Lieberman, 2004).
After filing bankruptcy Kmart then focused on profit sales, identifying opportunities to further improve efficiency and reduce costs, and enhance asset productivity (Lieberman, 2004). One year later the corporation filed a Plan of Reorganization and received approval from the U.S. Bankruptcy Court. On June 2003 Kmart became a publicly traded entity on NASDAQ as KMRT (Kmart Holdings Corporation, 2004). Just 18 months after emerging from bankruptcy protection with many analysts giving it up for dead, Kmart agreed November 17, 2004 to pay $11 billion for Sears Roebuck, creating a 3,500-store behemoth (Lieberman, 2004).
The merger creates the 3rd largest retailer in the US with $55 billion in annual revenues (Lieberman, 2004).
Companies can learn from this example. Kmart and Sears Roebuck merged to form and a huge retailer store to sustain success in the retailer industry. Both companies were losing revenues and stocks were low. Combined efforts of both companies as a merged corporation ranks third in the retailer industry with earned annual revenues of $55 billion.
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YouSigma. (2008). “Kmart Holdings Corporation and Sears Roebuck and Company Merger." From http://www.yousigma.com.
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