BBC

Suppliers desert Kmart

Shoppers are sparse at Kmart - as are suppliers

Bankruptcy-threatened retailer Kmart has come under additional pressure, after two key suppliers announced they would stop shipments to the US discount chain. First Kmart's only grocery distributor, Fleming, said on Monday it would stop supplies, after the retailer failed to make its weekly payment for deliveries of food and other products.

We look forward to resuming our critical business relationship with Fleming once we... are able to provide Fleming with adequate assurance of payment

Charles Conaway Kmart chief executive Shortly afterwards Scotts, a maker of gardening products such as Miracle-Gro plant food, announced it would suspend shipments as well.

Kmart shares are currently trading at their lowest level since the 1960s.

The firm has been hit by weak sales and poor logistics, while its antiquated stores have found it difficult to compete with updated outlets operated by rivals such as Wal-Mart and Target.

Most worrying of all, Kmart urgently needs a cash injection - and so far the firm has failed to find the money.

The next step, some analysts say, could be a filing for chapter 11 bankruptcy protection.

Kmart is the second largest discounter in the US after Wal-Mart.

'Big deal'

Fleming said it would ship only certain perishable products already in transit to Kmart stores, while at the same time trying to reclaim products worth $78m that had been delivered but not paid for.

The distributor's chief financial officer, Neal Rider, said he was working with Kmart as "they navigate through their current financial problems.

"We intend to resume delivery of food and other consumable products to Kmart upon receiving satisfactory assurance of Kmart's performance."

Retail analysts described Fleming's move as "a big deal".

Just half a year ago, Fleming had muscled aside its rival Supervalu and negotiated a 10-year exclusive supplier relationship with Kmart.

Kmart chief executive Charles Conaway said he looked forward to "resuming our critical business relationship with Fleming once we work through these financial issues and are able to provide Fleming with adequate assurance of payment".

At Scotts' headquarters in Ohio, meanwhile, company spokesman Jim King said the suspension of deliveries would not have an immediate impact on either its business or its relationship with Kmart.

He pointed out that January was not a strong month for garden products.

-- Anonymous, January 22, 2002

Answers

I did may part. Kmart is closer tha Walmart so we go there more often.

I bought Jurrasic Park III there when it came out on DVD.

-- Anonymous, January 22, 2002

All the top large department stores are GONE in my area. Bradleys. Ann & Hope. Ames. Woolworths. Some Chapter 7, some just Chapter 11. Can't find Size 5, white, Haynes briefs any more. A tragedy. It's not like I didn't stock up for y2k, but I figured a year or so's worth, not forever!

-- Anonymous, January 22, 2002

I wonder how long it'll be before Martha pulls her merchandise?

Brooks, keep an eye on your property values. When the local marts start closing, it might be time to think about relocating if you are in a position to do so.

-- Anonymous, January 22, 2002

Just heard on the radio that K-Mart has declared Chapter 11 bankruptcy. They are also saying that they are not planning to close any of their more than 2,100 stores. Wanna bet? They didn't get in the pickle they're in due to bad luck. While their management was diddling away and messing up, WalMart and Target were growing stronger.

There is no substitute for good management and it seems that is what K-Mart is lacking. Just look at their adds alone. WalMart constantly puts on these happy face ads, customers and employees smiling, and little Zorro zipping about cutting prices. I never saw such powerfully psychological ads from K-Mart. They have a hard struggle ahead now and will be screwing a lot of past suppliers over bills owed, possibly even cutting off employee fringe benefits such as vacation owed, medical coverage, etc, etc. I always hate to see some large company go under but it usually follows the same sort of management failures in virtually every case.

-- Anonymous, January 22, 2002

Penney's online catalogue?

-- Anonymous, January 22, 2002

I can't believe I fell for the zorro! I made an ad campaign using the zorro when I was in high school. It was a project for a business class I was in. Interesting...

The zorro was more in line with the McBurgler as in a character, not a smiley thing.

-- Anonymous, January 22, 2002