Stock-related entry. Read at your own risk.
I was at a K-mart (or Kmart) over the weekend, and as I strolled across the remnants of a once mighty discount business that could have stood toe-to-toe with Wal-mart, I wondered just what happened to them?
Although wikipedia's information should always be taken with a grain of salt,
"In the late 1980s and into the 1990s, the corporate office shifted much of its focus from the Kmart stores to other companies it had acquired or created...."
So, right off the bat, K-mart appears to be doomed the moment management lost interest in this business....
"Unlike its competitors Wal-Mart and Target, it had failed to invest in computer technology to manage its supply chain."
Perhaps, due to the above reason, it did not evolve to become as efficient its competitors.
"Furthermore, Kmart maintained a high dividend, which reduced the amount of money available for improving its stores."
I couldn't look up on what exactly was the historical percentage, but here's a classic example of how sustained high dividend isn't always a good thing....
"In a scandal similar to that involving Enron, Conaway and Schwartz were accused of misleading shareholders and other company officials about the company's financial crisis while making millions and allegedly spending the company's money on airplanes, houses, boats and other luxuries."
Management has always been a key factor one needed to look at, but as an individual investor, I know that if I was looking at them at the time before the scandal, I could not have predicted that it would come to this. Sort of goes to show why stocks can be such a risky gamble, because things can still go awry even when you research everything....
"On May 6, 2003, Kmart officially emerged from bankruptcy protection (...) Lampert took control of the company and began to run it for profit instead of sales.
So, I assume this part is why K-mart is no longer known for its discount prices and blue light specials, and by now, we all know it's stuck between a rock and a hard place against Wal-mart and Target.
In hindsight, there's so many good lessons here for investors to take away from. None of them are terribly difficult, and chances are, you may already know about them. Still, these signs are important enough to keep in mind, and it especially hits home for me whenever I walk through a K-mart....
April 20th, 2009 at 06:22 pm 1240251762
April 20th, 2009 at 06:25 pm 1240251923
April 20th, 2009 at 09:44 pm 1240263891
April 21st, 2009 at 12:17 am 1240273027
April 21st, 2009 at 01:00 am 1240275658