Attention Kmart shoppers: Kmart is the #3 discount retailer in the US, behind Wal-Mart and Target. It sells name-brand and private-label goods (including its Joe Boxer and Jaclyn Smith labels), mostly to low- and mid-income families. It runs more than 1,200 off-mall stores (including 25 Super Centers) in 49 US states, Puerto Rico, Guam, and the US Virgin Islands. About 270 Kmart stores sell home appliances (including Sears' Kenmore brand) and some 895 locations house in-store pharmacies. Poor sales have forced its parent, Sears Holdings Corp., to close more than 250 Kmart stores since merging Kmart with Sears in 2005. Kmart also operates the kmart.com website, which includes merchandise from Sears.
Kmart's sales continued their steady descent in fiscal 2013 (ends January), declining 5% to $14.6 billion versus $15.3 the prior year. Kmart's shrinking store count and competition from rival chains, including Target and Kohl's, have led to declining same-store sales at Kmart stores in recent years. The chain's decrease in comparable store sales of nearly 4% in fiscal 2013 reflected decreases across most of its merchandise categories, most notably in the consumer electronics, pharmacy, grocery and household, and drugstore categories. Kmart reported operating income of $5 million in fiscal 2013 compared with an operating loss of $34 million the prior year.
The pairing of Sears and Kmart in 2005 was intended to leverage the strengths of both chains by making their products, brands, and services available through more locations and distribution channels. Sears, which has long sought a way to diversify away from the shopping mall, was attracted to Kmart's off-mall locations. But the combination has proved disappointing. Both retailers have suffered from falling same-store sales as they failed to attract customers.
Sears, meanwhile, has taken advantage of cross-selling opportunities by offering proprietary Sears brands, including Craftsman, Diehard, and Kenmore products, in Kmart stores. The sale of Kenmore brand appliances is meant to help Kmart differentiate itself from its larger rivals, Wal-Mart and Target, which stock a more limited range of appliances. Kmart stores have been remodeled to offer Sears brand appliances and Sears plans to continue to roll out its home appliances to more Kmart stores. There are also about 20 Sears Auto Centers operating in Kmart stores.
Kmart Corporation is a wholly-owned subsidiary of Sears Holdings Corporation and accounts for more than a third of its sales.
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