- BusinessWeek reports that Kmart CEO James B. Adamson is being pressed by the company’s creditors to come up with a reorganization plan for the company by early 2003, or at least six months before the company said it would emerge from bankruptcy protection.
While Kmart is said to have made some progress by closing 283 stores and cutting $130 million in annual overhead, the outlook for holiday season sales is not promising, and the company has lost some $2 billion since it declared bankruptcy last January.
- The Chicago Sun-Times reports that Kmart President and COO Julian Day says that the company will roll out new initiatives for the 2002 holiday season, including “a higher priority on customer service and giving greater decision-making power to store managers in such key areas as inventory control, merchandise layout and deployment of staff.”
These initiatives have been tested successfully at 10 Chicago area stores, Day said.
- The New York Times reports that these days, Martha Stewart may need Kmart as much as the management of the bankrupt retailer needs here.
When Kmart filed for Chapter 11 protection, the general consensus was that Stewart might eventually leave for greener pastures, and the corporate honchos at Kmart seemed to be going out of their way to assuage her and convince the style maven that she had a future at Kmart.
Now, however, with Stewart facing many legal questions about insider trading activity, she may need Kmart to remain viable as a place where her products can continue to sell.
Kmart has been reporting that Stewart’s various lines continue to perform well, though Kmart itself has not been able to stanch its financial bleeding. The big questions are about what happens if Stewart is indicted or convicted of a crime. Will her product lines collapse around her, or will they maintain a life separate from her legal woes? And, if they do suffer because of the style maven’s legal problems, what will the impact be on Kmart?
- Fortune magazine reports that no matter what happens to the company, “Kmart CEO Adamson will still walk away with a shopping cart full of cash. He has already received $2.5 million--the company calls it an ‘inducement payment’--just for coming aboard as CEO, and his annual salary totals $1.5 million. Then there are the perks guaranteed in his contract--weekly private plane service between his residences in Detroit, New York, and Florida; a car and driver in Michigan and New York; and temporary accommodations at the swanky Townsend Hotel near Kmart headquarters. A standard room there costs $320 a night.”
The magazine reports that Adamson’s critics are particularly annoyed by the fact that he was on the board of directors during the time that the company was committing what now are called “accounting irregularities.” Which means that Adamson is “in the incredibly awkward, deeply conflicted position of heading up Kmart even as his own role in its collapse is being scrutinized,” Fortune reports.