rs, a trend has developed that has shoppers waiting until later in the month to complete their holiday purchases. This puts additional pressure on retailers in determining when to use additional promotions.
Internally, the company is financially strong, maintaining a current ratio of approximately 2.0 to 1 over the last ten years. However, sales for the company have increased at a rate far less than that of its chief competitor, Wal-Mart, over the past five and ten years, and the company has taken steps to change its image and its approach to selling. Chief among these changes are major renovations of existing Kmart stores, and the implementation of the superstore concept to Kmart selling. In addition, the company has entered into an agreement with its chief competitor, Wal-Mart, to sell its PACE membership warehouse operations. Wal-Mart is experienced in the lower-margin warehouse operations through its Sam's Club stores, and the divestment should enhance Kmart's earnings performance over the next several years.
Kmart's primary strengths include its strong brand recognition and its presence in major markets. In the United States and Canada, Kmart targets "busy, budget-conscious" parents in the middle class (incomes ranging from 435,000 to $55,000). The company's financial strength has made possible the renovation of its existing stores, and the move to larger superstores. While the company's sales have been lackluster when compared to its primary competitor, Wal-Mart, in recent years, Kmart remains financially viable and has the resources it needs to respond to the threat posed by Wal-Mart.
The company's weaknesses stem from its lackluster sales in the 1980s. While the company's revenues and earnings increased during that time, they did so at a rate far below what its chief competitor was able to accomplish. The company also suffered from an image of a mass marketer, rather than as a marketer to the middle class, ...