Kmart has Lost 67% of its Business in 15 Years

Kmart’s shrinkage since it has been part of Eddie Lampert’s Sears Holdings (NASDAQ: SHLD) has been absolutely incredible. Kmart’s sales fell by 67% between 2000 and 2014, CNN Money reported.

Kmart reported sales of $37 billion which shrank to $12.1 billion in 2014. Actually the revenue drop is even greater than that if you add inflation to the calculation. According to the Bureau of Labor Standards’ CPI Inflation Calculator $37 billion in 2000 dollars equals $50.87 billion in 2014 cash. Basically the Kmart brand lost nearly $40 billion in revenue and far more in potential value in 15 years.

The revenue figures show us that Kmart is now smaller than Dollar General (NYSE: DG). Dollar General reported a TTM Revenue of $19.31 billion on April 30, 2015. Dollar Tree Stores (NASDAQ: DLTR) could also soon overtake Kmart has well it reported TTM revenue of $8.77 billion that was growing at a rate of 8.82% a year on April 30, 2015. Now that Dollar Tree controls Family Dollar it probably will overtake Kmart sometime this year.

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If that was not astounding the total amount of Kmart’s revenue is similar to the amount of Walmart Stores Inc. (NYSE: WMT) sluggish revenue growth for the past year: $8.34 billion. For the record Walmart’s revenue grew from $477.18 billion in April 2014 to $485.52 billion in April 2015.

If that wasn’t bad enough Kmart’s 2014 sales figure was smaller than Amazon.com (NASDAQ: AMZN) revenue growth. Amazon’s TTM revenue grew by $14.05 billion between June 2014 and June 2015, rising from $81.76 billion to $95.81 billion.

The Incredibly Shrinking Kmart

It wasn’t just Kmart’s revenue that shrank at an incredible pace – Kmart’s physical footprint is now less than half of what it was in 2000. At the turn of the 21st Century Kmart operated 2,165 stores but today it has just 979 locations.

That means there are more former Kmart locations out there than actual Kmart stores. Instead of saving Kmart, Lampert who bought Kmart and merged it with Sears in 2003, has effectively stripped it of assets.

Woodhaven Big Kmart, 19800 Allen Road, was empty of all but some cleaning and moving supplies on Wednesday, the last day it was open to the public. The retailer has been selling off its inventory and store fixtures for the last several weeks. A new development project is expected to get underway in the spring. Photo by J. Patrick Peppe
Woodhaven Big Kmart, 19800 Allen Road, was empty of all but some cleaning and moving supplies on Wednesday, the last day it was open to the public. The retailer has been selling off its inventory and store fixtures for the last several weeks. A new development project is expected to get underway in the spring. Photo by J. Patrick Peppe

Some observers think Lampert’s operation of Sears was a deliberate asset strip. Others such as myself suspect plain old fashioned incompetence. Either way, Lampert has figured out how to destroy much of the value of two great American brands.

Sears Could be out of Money Next Year

Sears Holdings reported that its TTM revenue was falling at a rate of 25.3% on April 30, 2015. If that were to continue Sears would have no revenue within one year in April 2016. That means both Sears and Kmart would have to shut down next year.
Sears Holdings reported a TTM revenue of $29.2 billion, when Kmart is subtracted that gives Sears itself $17.1 billion in revenue. This does not include the $2.5 billion Lampert is trying to raise through various real estate deals.

Critics have called those deals which involve the sale or transfer of Sears and Kmart properties to Lampert owned companies like Seritage asset stripping. It is also apparent that those deals will not raise enough money to save Sears or Kmart from themselves.

Is this the End of Kmart?

One strong possibility is that Lampert will sell Kmart off sometime this year. Another is that he might simply shut down the chain which would effectively be the end of an American retail legend. At one time Kmart was America’s dominant discount store and in an earlier incarnation as the S.S. Kresge Company it was one of America’s largest dime store operators.

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Kmart in one or form or another has been in business since 1899, its first store opened in Detroit in that year according to a timeline prepared by The New York Times. It has been part of a variety of publicly traded companies since 1925 when S.S. Kresge Co. first appeared on the New York Stock Exchange. The first Kmart store opened in 1962 in Garden City, Michigan. By the end of 1962, S.S. Kresge Co. was operating 17 Kmart stores that brought in $483 million in revenue that would be $3.8 billion in 2015 dollars.

By 1981, the company by then called the Kmart Corporation was operating 2,000 stores. Walmart Stores Inc. (NYSE: WMT) did not surpass Kmart in sales until 1990. Kmart has been closing stores for 20 years since 1995.

It looks as if two American retail legends, Kmart and Sears could disappear next year. Eddie Lampert could go down in history as one of the most destructive forces in the history of American retail.

There are of course lots of people who must be very grateful to Mr. Lampert. They include executives and stockholders at Dollar General, Dollar Tree, Walmart, Kroger (NYSE: KR), Target (NYSE: TGT) and other chains that have been absorbing all the customers and revenue that Kmart has been shedding.

One has to wonder how the disappearance of retail institutions as ubiquitous as Sears and Kmart will affect the American psyche and the national mood. That mood is already very sour thanks to growing income inequality. The job losses that result are sure to have some impact on the presidential election possibly to the benefit of insurgent candidates like Donald Trump and our friend Bernie Sanders.

Disclosure your blogger is long on Kroger.