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CNN Live At Daybreak

Kmart Will Not Close Its Doors

Aired January 23, 2002 - 06:47   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: As you've heard Deborah mention, the retailer giant Kmart has filed for Chapter 11 bankruptcy protection. But company officials say they are not turning off the blue light.

CNN's Kitty Pilgrim tells us how company officials view this bankruptcy filing.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Kmart is keeping all 2,114 stores open. And according to its latest filing with SEC, it has about $17 billion in assets. But as of Tuesday, it's officially in bankruptcy.

According to the CEO, it's not the end, but the beginning of a comeback.

CHARLES CONAWAY, CEO, KMART: This is going to help Kmart actually expedite its turnaround plan and be stronger, more profitable.

PILGRIM: One of the reasons Kmart says it was pushed to the brink is the erosion of supplier confidence. Kmart has 4,000 vendors and suppliers. Fleming, a Dallas-based food distributor, cut shipments to Kmart because it couldn't make its weekly payment for deliveries. Kmart is a $4.5 billion customer, and it missed a $78 million payment. They won't continue to supply Kmart until they work out how they will get paid.

DEBORAH WEINSWIG, BEAR STEARNS: What really kind of pulled the plug was Fleming, which delivers their food and consumables, stopped delivering on Friday. And I think that really just kind of, you know, brought us to the final demise.

PILGRIM: Business analysts say the current climate of wariness has changed the way companies are thinking.

THOMAS MAYER, KRAMER LEVIN: People, I think, are somewhat surprised that they weren't able to go to their banks and raise the money that they needed to stay out of bankruptcy. And it may be that Enron created a climate where it was more difficult to borrow money.

WAYNE HOOD, PRUDENTIAL FINANCIAL: I mean, this company, you know, lost money in the first three quarters of the year. We cut our earnings in half by the fourth quarter. So, clearly, before, you know, the Enron debacle, Kmart was headed down a spiral that needed to be reversed. And I think the environment just helped push them right over the edge.

PILGRIM: Kitty Pilgrim, CNN Financial News.

(END VIDEOTAPE)

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