Kmart Corp. Becomes the Largest Retailer in U.S. History to File for Bankruptcy
Kmart Corporation, established in 1962 as a discount division of S.S. Kresge Company, became a prominent presence in U.S. retailing, particularly with successful partnerships, including one with Martha Stewart in 1997 that generated significant sales. However, the company faced increasing competition from major retailers like Wal-Mart and Target, which, coupled with disappointing holiday sales and ineffective pricing strategies, led to financial troubles. On January 22, 2002, Kmart filed for Chapter 11 bankruptcy reorganization, marking it as the largest retailer in U.S. history to do so at that time. At the time of the filing, Kmart reported $16.29 billion in assets against $10.35 billion in debt, with $366 million in cash on hand. To support its operations during the bankruptcy process, Kmart secured $2 billion in financing from J.P. Morgan Chase and other banks. In 2004, Kmart made a significant move by acquiring Sears, Roebuck & Co. for $11 billion, forming Sears Holdings, which was well-received by investors. Despite its challenges, Kmart continued to operate stores as of 2014, reflecting its enduring presence in the retail landscape.
Kmart Corp. Becomes the Largest Retailer in U.S. History to File for Bankruptcy
Kmart Corp. Becomes the Largest Retailer in U.S. History to File for Bankruptcy
Kmart began in 1962 as a discount division of five-and-dime store S.S. Kresge Company and became a fixture in the American landscape. In 1997 the company signed up Martha Stewart, and Martha Stewart Living Omnimedia did $1.6 billion in sales through Kmart. (Other brands, such as Joe Boxer and Jaclyn Smith, were added later.)
However, on January 22, 2002, the Kmart Corporation filed for Chapter 11 bankruptcy reorganization. Competition with retail giants Wal-Mart and Target, as well as slumps in holiday sales and failed price-cutting campaigns, led to Kmart's financial decline. Kmart's stock, which reached a high of $13.16 in August of 2001, closed at 70 cents.
In filing with the U.S. Bankruptcy Court in Chicago, Kmart listed $16.29 billion in assets, $10.35 billion in debt, and $366 million in cash. The company then secured $2 billion from J.P. Morgan Chase and other banks to finance its continuing operations.
In 2004 Kmart bought Sears, Roebuck & Co. for $11 billion, and the new company became known as Sears Holdings. Wall Street investors applauded the deal, and stock for Kmart and Sears rose. In 2014, Kmart stores are still operating.