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Kmart
turns into take-over object: Kmart's share prices have continued their almost free fall. The US retailer saw its market capitalization drop to just over 1.6 billion US dollars last Friday. This is the lowest level in thirty years. With 2,100 stores and last year's sales amounting to 37 billion dollars, Kmart is one of the large players in US retailing. It has, however, found it increasingly difficult to compete with Wal-Mart, Target and other discounters. While Wal-Mart's success is based on its more than 1,000 supercentres, Kmart has only 115 such stores. The present difficulties will make it hard for Kmart to restructure its store network and boost its productivity. A lack of technology and logistics investments is beginning to show in the stocking of stores, which is not up to the level of the more successful competitors. Also suppliers may be increasingly reluctant to continue with large shipments in a situation that they may deem insecure. Last Thursday, Kmart issues a profit warning and said that it is negotiating additional financing. This and ongoing speculations about possible bankruptcy caused share prices to drop 30 per cent, to its lowest value for almost 35 years. The low market value of Kmart may become an incitement for leading European retailers to establish themselves in the United States. There has long been talk about Carrefour, Casino and Tesco wanting to enter the world's largest consumer market. This may be an opportunity which at least one of the does not want to miss - if they want to take on Wal-Mart on its home turf?
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