business news in context, analysis with attitude

The Detroit Free Press had a story over the weekend about how industry experts believe that Kmart could be headed to bankruptcy as early as next year, as it faces the reality of "plunging sales, deteriorating finances," as well as the closure of "hundreds of unprofitable stores in the past decade in an effort to stop the losses, which have exceeded $8 billion since 2011. Once known for blue light specials, Kmart is now infamous for its red ink."

"It's incredibly hard to run a retail company when every quarter you get less sales and less customers coming through the door," says Neil Stern, senior partner at McMillan Doolittle. "You can only cut costs for so long and sell assets."

Kmart spokesman Howard Riefs, needless to say, has a different take on the company's position: "We are an asset-rich enterprise with multiple resources at our disposal to fund our transformation, including $4.7 billion of inventory already paid for; a substantial, valuable real estate portfolio and leading proprietary brands such as Kenmore, Craftsman and Diehard."
KC's View:
Asset rich? Really? Because it seems to me that those assets don't include any significant level of innovative leadership, marketing smarts, merchandising savvy, or a workforce that has been empowered to make a difference at the grassroots level. Add to that fewer customers and sales, and the image of a company that is closing stores and selling assets, and one has to wonder exactly what meaningful assets Kmart is talking about.