Kmart Turns A Profit!

Discussion
Jan 06, 2004
George Anderson

By George Anderson


Perhaps the nicest news coming out of this past holiday season was this: Kmart made a profit of $200 million from merchandise sales in its stores during November and December, putting it in a position to turn its first quarterly profit since 2001.


The company attributed its improved performance to better inventory management and a steep reduction in promotional activity.


Kmart was able to reduce inventory at the end of December to 20 percent below what it had on hand at the end of 2002, according to the company’s chief executive and president, Julian Day.


Mr. Day also explained Kmart’s promotional focus in a statement released by the retailer. “Much of the promotional activity in prior years resulted in generating unprofitable sales,” he said. “By being more thoughtful in our approach this year, we have improved the profitability of our market basket.”


Moderator’s Comment: What is your reaction to the latest Kmart financial news and the direction in which the company is headed?


Kmart’s philosophy reinforces something we were told a very long time ago by a retail store manager.


To paraphrase: “There is too much time spent (by analysts and management) talking about same-store sales comparisons and not nearly enough on how to make
every store profitable.”
[George
Anderson – Moderator
]

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