Kmart to stock shelves with bankrupt companies’ products
Kmart is going to be the land of the living dead.
The desperate discount chain, owned by Edward Lampert’s Sears, has a new merchandise strategy that involves stocking its shelves with products from bankrupt companies or mass liquidations, the company said on Wednesday.
“The path to making Kmart great again starts with sourcing truly brag-worthy deals that can only be found at Kmart,” said President Alasdair James in a statement.
But there is not a huge difference between the 962-store chain and the companies it’s sourcing from.
In January, Kmart said it would close more than two dozen of its own stores this spring, due to poor performance, and earlier this month Sears revised its fourth-quarter guidance by warning investors that same-store sales at Sears and Kmart will take a tumble, with Kmart stores expected to decline 7.2 percent this past quarter and 7.3 percent for the full year.
But some industry analysts say the “brag-worthy” deals strategy may just breathe new life into the retailer by improving sales.
“It has treasure-hunt appeal, and there are tons of liquidation buys out there,” said Richard Church, managing director of Discern Investment Analytics.
“These deals will capture some attention from consumers if the buys and merchandise are good enough,” he added.
Kmart only hinted at the types of deals it’ll offer. Shoppers will soon find outdoor cookers, smokers and outdoor lighting from Brinkman Corp., a 30-year-old company that makes outdoor leisure products and sporting goods. Brinkman filed Chapter 11 in October.
The deals also will include clothing and food, and the program will complement its “Bluelight Specials” program that was brought back last year. “We have many apparel sources offering unique deals to us that we are currently considering,” a Kmart spokesman said.
There is no shortage of businesses that specialize in selling merchandise from distressed companies, said Richard Schurig, a partner in Cohn Reznick.
Ollie’s Bargain Outlet of Harrisburg, Pa., a publicly held company, sells everything from housewares to sporting goods and food from closeouts, overstocks, package changes and irregulars to stock its stores. It reported a 23 percent increase in sales over the holidays with same-store sales rising 5.6 percent.
Based on this sales trend, Ollie’s expects its net sales for its fiscal year ending Jan. 30 to increase 19 percent to $760 million.
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