Did Wal-Mart Kill Kmart?

Offering everything from computers and televisions to Levi Jeans and apple pie, the membership warehouse superstore Costco(Nasdaq: COST) has become a big hit with consumers. Costco's CEO, Jim Sinegal, recently played "Buy, Sell, or Hold?" with David and Tom Gardner on The Motley Fool Radio Show.

David: First one up -- it's a retailer that's coming out of bankruptcy. Buy, sell, or hold: the future of Kmart?

Jim Sinegal: Sell. I think it's a very tough road for them at this point. And they're dealing with the toughest competitor in the world -- Wal-Mart(NYSE: WMT).

David: And is that what happened to Kmart? When the story is writ, is the chapter about the death of Kmart entitled, "Wal-Mart"?

Jim Sinegal: I think so. I think that, plus the lack of attention to running their own business....Wal-Mart is very, very good. Wal-Mart continues to grow. Wal-Mart comes at you in a wave. The world has never seen anything like Wal-Mart.

Tom: Buy, sell, hold: Internet retailing?

Jim Sinegal: Hold. I don't think it's successful at the moment, and it certainly hasn't generated any great profitability. I still hold out hope that there are going to be means of speeding out navigation of the Internet and ways of appealing to the consumer.... They're probably going to make it a more significant venue for selling in the future.

David: And finally, Jim -- buy, sell, or hold: a 20-pound box of Cheerios?

Jim Sinegal: If we can find it, I would buy it.

Costco is one of Tom Gardner's picks in the Motley Fool Stock Advisor.

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