|
Kmart general overview
Kmart is still in the midst of its turn around campaign.
The end of 2003, the first two months of the fiscal fourth
quarter at Kmart, was marked with new strategic hires, increased
profitability despite reduced same store sales, a ramping
up of strategic brands and renewed hope that Kmart will
weather the storm.
Income before interest and income taxes for November and
December is expected to be in excess of $350 million, not
including gains on real estate transactions of approximately
$75 million. After interest expense (including the accelerated
amortization of credit facility fees due to the reduction
in its credit facility) and income taxes, Kmart is expected
to generate net income of over $200 million for the first
two months of its fourth quarter, not including gains on
real estate transactions of approximately $50 million after
taxes. Including gains on real estate transactions, income
before interest and income taxes is expected to be in excess
of $425 million and net income is expected to be in excess
of $250 million.
The Company's same-store sales for the first two months
of its fiscal fourth quarter declined by 13.5% from the
prior year. The Company's total sales for the first two
months of the fourth quarter of fiscal 2003 were approximately
$5.1 billion compared to $6.9 billion in fiscal 2002. The
decrease in total sales is attributable to the decrease
in same-store sales referred to above as well as the closure
of 316 stores during the first quarter of fiscal 2003.
Julian C. Day, President and Chief Executive Officer of
Kmart, said, "We are managing the business to restore profitability.
Much of the promotional activity in prior years resulted
in generating unprofitable sales. By being more thoughtful
in our approach this year, we have improved the profitability
of our market basket. I am pleased with the efforts of our
store associates and store managers to improve customer
service and the commitment of our headquarters employees
to support the store experience. By continuing to offer
our customers attractive values in a way that allows Kmart
to generate profitable sales, we should be able to continue
to invest in our business to serve customers better in the
future."
Kmart Holding also announced that John D. Goodman will
join the Company as Senior Vice President, Chief Apparel
Officer, and James D. Donlon III will join the Company as
Senior Vice President, Chief Financial Officer, both reporting
to President and Chief Executive Officer Julian C. Day.
Goodman joins Kmart after 11 years at Gap Inc., a leading
international specialty retailer operating 3,075 store locations
with reported 2002 sales of $14.5 billion. At Gap Inc.,
Goodman served in various capacities, including, most recently,
Senior Vice President, Gap Inc. Outlet, Merchandising, Planning,
Production and Distribution. Prior to joining Gap Inc.,
Goodman worked for Bloomingdale's, where he held the position
of Buyer in several areas of women's apparel.
Donlon joins Kmart from the DaimlerChrysler Corporation,
where he was Senior Vice President -- Controller, and a
member of the Chrysler Group Executive Committee. In his
25 years there, Donlon played key roles in a variety of
critical senior management positions within the Finance
organization. In his most recent position, he was responsible
for the finance activities of Sales & Marketing, Procurement
& Supply, Product Development, Corporate Financial Activities,
Manufacturing, Quality, Serviceability and International
Activities.
Kmart continues to woo specific various demographic segments
with lines geared towards them. Thalia's pop flavored brand
that is geared to the Latina clientele, and is finally ramping
up its presence. In the junior area there is some signeage
and a free standing display or some wall space designated
to the brand while in the girl's area there is sometimes
a four way but still no signeage. The merchandise is priced
slightly higher than the Route 66 and is definitely bright
and popish like the star. Joe Boxer continues to offer incredibly
detailed active streetstyle with an Urban flair in juniors
and girl's while in young men's they are currently offering
skate and surf inspired looks. The Basic Editions core 'basics
plus' items are getting plenty of floor time in all departments
with table top programs of tees and floor space devoted
to novelty bottoms, core bottoms and fashion sets in the
kids area. In the men's area we also saw a few pieces under
the 'Exquisito' tag which is the first specifically Latino
brand we have seen at mass for menswear. The shirts are
all based on the 'guayabera' style with a boxy shape, open
hem and vertical chest details.
Toddler and infant department
overview
The list of players here is short but sweet. Sesame
Street is the biggest name on the block with Elmo, Big Bird
and all of the cast coming out to play. Disney offers both
generic Disney Kid's fashions and some Baby Pooh gear while
Joe Boxer and basic Editions round out the selection here.
The floor is neater than it has ever been with a smaller
but more meaningful assortment on deck.
Opportunities in the infant's
and toddler's department
Kmart fully believes that their customer base will
gravitate to Sesame and Disney on the basis that these brands
represent both quality and value, and rightfully so. The
product on the floor reflects both great styling and integrity
to the brand but it is also priced sharply. So where is
the opportunity for a non branded or licensed house in this
mix? Perhaps there is a demographic angle that can be explored
here. Sure, most recent arrivals to the United States are
in a hurry to embrace the American culture and television
icons, but there is surely room for some home spun fun here.
We would love to see some of the same thinking behind Thalia
applied to this size range. How about some bright screen
printed tees or all over printed items with Spanish catch
phrases like 'Princesa' or 'Encantador'. We even feel that
adapting seemingly grown up pieces like track suits, pleated
skirts, hook ups for boys and guayabera style overshirts
would work well here.
A look into the department:
|
