Kmart Brands a New Chief

Following its emergence from bankruptcy last year, Kmart (Nasdaq: KMRT  ) has been hard-pressed to suppress rumors that Chairman Eddie Lampert has been trying to transform the discount retailer into a holding company along the lines of Warren Buffett's Berkshire Hathaway. Those rumors were fueled when analysts discovered the value of Kmart's real estate after it sold 50 stores to Sears (NYSE: S  ) and 18 stores to Home Depot (NYSE: HD  ) earlier this year.

Julian Day, Kmart's chief executive and president, was seen as a financial leader necessary to right the retailer's bankrupt ship. Now that it's finding itself back in the black -- it's posted three consecutive quarters of profit and has $3 billion in cash -- it's looking to win back customers and stem the decline in same-store sales where it's been losing market share to Wal-Mart (NYSE: WMT  ) and Target (NYSE: TGT  ) .

Its latest move probably fans the flames of rumor a little more.

Kmart announced it had hired Aylwin Lewis, formerly an executive at Yum! Brands (NYSE: YUM  ) , to succeed Day and bring his customer-oriented, brand-marketing background to the fore. The company is refocusing on its retail operations by hiring new design and marketing executives, revamping its clothing lines, and remodeling some 20 stores around the country as prototypes for the "new" Kmart.

Lewis is seen as a deal maker, which could be useful if the company is looking to expand beyond retail sales. It's an environment in which Lewis should be comfortable; he served 13 years with Yum!, which features brands such as Pizza Hut, Taco Bell, A&W All-American Food, and Long John Silver's. He currently sits on the boards of Halliburton (NYSE: HAL  ) and Disney (NYSE: DIS  ) .

Even as it has slimmed itself down, the company could use its cash horde and Lewis' contacts to make acquisitions outside of the retail arena. It would be a multibranding opportunity to increase shareholder value, perhaps acquiring a fast food restaurant or even another retailer. Speculation has even centered on Lampert merging Sears and Kmart, as he is a major stockholder of both companies.

Lewis is generally given high leadership marks and is seen as the next phase in Kmart's turnabout story. It remains to be seen whether that story is one of retailing or a multibrand conglomerate.

Fool contributor Rich Duprey is primarily a single-brand beer drinker. He does not own any of the stocks mentioned in this article.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 502691, ~/Articles/ArticleHandler.aspx, 12/18/2014 8:31:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement