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Kmart Net sales in fiscal 2001 where $ 997; this is a decrease from $ 1, 114 net sales of 2000. The decrease is the result of lower net earnings, excluding non-comparable items, partially offset by a decrease in inventory and an increase in accounts payable. Investing activities was $ 1, 1501 in 2001 compared to $ 1, 144 in 2000. The increase in cash used for investing activities was due to higher capital expenditures for the conversion an expansion of Kmart stores to Kmart Super centers, expansion of aisles to increase visibility of promotional items and an investment in point-of-sale equipment. Financing from outside sources was increased in 2001 to $ 1, 354 from $ 87 in 2000. We where relying on a traditionally strong fourth quarter (Christmas season) in order to place the company in correct balance.
On the contrary, we received a extremely disappointing fourth quarter; the event forced us to file chapter 11 bankruptcy. The financial analyses of Wal-Mart and Target reveal how poorly Kmart is doing in Kmart is battle the results of past unplanned events. The approaches that the competitors are taking in order to increase the growth of their corporations are not constraints to our restatement as a profitable company. Both companies are taking large strides in improving the discount store business. In fact, these strides can be and will be used as a template for future business; but since Wal-Mart and Target have become innovators in their prospective management strategies, they are bound to make some mistakes.
The position we are presently in will allow us not to make the same mistakes but instead, avoid them and improve the systems that our competition are implementing. Our only true financial constraint lies with in our financial condition. The financial state of Kmart is completely dictated by our lender, DIP Credit Facility. Under the DIP Credit Facility, capital expenditures are restricted to $ 650 during fiscal 2002, $ 800 during fiscal 2003 and $ 212 during fiscal 2004 up to April 22, 2004.
We are also required to maintain specified levels of cumulative earnings before interest, taxes, depreciation, amortization and special charges for periods ending early as June 2002 and thereafter. The DIP Credit Facility also contains other customary covenants, including certain reporting divided payments, sell or dispose of assets, change the nature of our business and enter into affiliate transactions, mergers and consolidations. Failure to satisfy these covenants would result in an event of default that could cause the funds necessary to maintain our operations to become unavailable. Kmart has improved the execution of their pricing strategy by positioning their prices within three percent of the competition on image items and within five percent on all other products. They also guarantee the lowest sale price every time. Kmart continues to upgrade the technological infrastructure and information systems used in its stores, distribution center and headquarters in order to improve in-stock positions, operating efficiency and increase pricing flexibility.
The Point of Sale system allows debit card transactions, coupon scanning and faster credit card processing at the point of purchase. This increases productivity of cashiers and improves the shopping experience for the customers. In November of 1995, Kmart merged onto the information superhighway with their website Blue light. com. It started off to provide general information like company history and press release archives.
In 1998, Kmart launched a secure website so surfers can shop online for a wide assortment of merchandise. They have set a record by signing up their one-millionth new subscriber to their free Internet service. Potential competitors are not many when it comes to the retail discount industry. The barriers to enter this market are very high. You have giants guarding the arena very harshly. These giants include Wal-Mart, Kmart, Target and Warehouse clubs like Cosco and BJs.
These market shareholders make up approximately 47 % of the total discount retail industry. My only guess of a potential competitor would be supermarket giants like Walbaums, King Killed and Shop Rite. They already have the food industry down to a science, which Wal-Mart, Kmart and the others have started to have in their stores. They have the experience with large stores. Another potential competitor might be the high end department stores. These include Bloomingdale's, Lord & Taylor, Macys, etc.
Who is to say that they are not eyeing the discount department store industry? They have the brand name label name connections. They have the experience with clothing, electronics, fragrances, etc.
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Research essay sample on Point Of Sale Wal Mart
