BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh
BBCi CATEGORIES   TV   RADIO   COMMUNICATE   WHERE I LIVE   INDEX    SEARCH 

BBC NEWS
 You are in: Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 


Commonwealth Games 2002

BBC Sport

BBC Weather

SERVICES 
Wednesday, 2 January, 2002, 23:13 GMT
Kmart slumps on bankruptcy talk
Kmart sale
January sales prices for Kmart shares
The US retail discount chain Kmart saw its share prices plummet to their lowest levels for about 20 years after leading analysts said: "Sell".


Kmart just seems to be the third choice for consumers behind Wal-Mart and Target because they have cleaner stores, they're more modern

David Sowerby, portfolio manager
Prudential analyst Wayne Hood caused near panic among investors by saying he "would not be surprised" if the company filed for bankruptcy protection "if trends do not improve".

The company's share price lost more than 13%, hitting its lowest level since the early 1980s.

"Kmart just seems to be the third choice for consumers behind Wal-Mart and Target because they have cleaner stores, they're more modern [and have] even better parking lots," said David Sowerby, portfolio manager for Loomis Sayles.

Credit rating hit

Kmart responded by insisting it has sufficient funds and access to credit.

"Kmart is implementing a major corporate revitalization strategy that includes massive cultural and operational changes, said spokesman Jack Ferry, insisting that this strategy has already showed results.

But some analysts remained sceptical following a downgrade of the company's debt rating last month by the Moody's Investors Service.

"They still have access to capital markets, but they do not have competitive and favourable pricing in capital markets anymore," said Richard Hastings, credit economist and retail sector analyst for Cyber Business Credit.

The comments by Mr Hood were unlikely to improve Kmart's standing in the financial markets.

"The downgrades from the debt rating agencies were very damaging to Kmart, but for a stock analyst to come out and make a public comment using 'bankruptcy' makes it even more difficult for Kmart to access markets at competitive pricing," Mr Hastings said.

"I think [the Prudential downgrade] is pretty much the only thing [the company's share price] it right now," said Eric Beder, retail analyst and senior vice-president at Ladenburg, Thalmann & Co.


Terror's impact

Signs of a slowdown

Rate cuts

Analysis

Key players

FULL SPECIAL REPORT
See also:

02 Jan 02 | Business
US economy turning up?
13 Dec 01 | Business
US retail sales plunge
13 Dec 01 | Business
US corporate woes continue
12 Dec 01 | Business
US trade deficit shrinks
12 Dec 01 | Business
False starts for US economy optimism
12 Dec 01 | Business
US interest rates cut again
23 Aug 01 | Business
US retail results poor
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories