Kmart emerged from bankruptcy on Tuesday with much the same question it faced going in: Can the troubled retailer compete successfully against the likes of Wal-Mart ( WMT) and Target ( TGT)?

While the emergence signals that Kmart is willing to give it a try, some retail analysts don't give the company much of a chance. Kmart faces long odds and tough challenges as it tries to turn around its operations, they say.

"Going into bankruptcy relieved them of a lot of burdens, but what it hasn't done is relieved them of the ultimate burden: They just don't have a compelling story for consumers," said Russell Jones, president of Decisive Retail Technology.

Struggling with below-plan sales, intense competition and lack of confidence from suppliers, Kmart filed for Chapter 11 bankruptcy last year; at the time, it was the largest such filing by a retailer.

Over the last 15 months, the company has replaced its chief executive officer twice as part of a management reshuffling and gone through two rounds of store closures , shuttering about 600 outlets in the process.

The company is emerging from bankruptcy with about $6.4 billion in current assets, including $1 billion in cash, compared with about $2.4 billion in current liabilities. Kmart also has a $2 billion credit facility that it can draw on for working capital.

Kmart issued new shares of stock to debt-holders, including Edward Lampert's ESL Investments. The company canceled its old stock. The new shares will trade on the over-the-counter market until the company can meet the listing criteria for the Nasdaq or another national securities market, Kmart said.

Lampert, who helped resurrect automobile parts company AutoZone ( AZO), will serve as chairman of Kmart's board.

"This is a momentous day for Kmart," company CEO Julian Day said in a statement. "Kmart emerges from Chapter 11 as a new and vital enterprise focused on delivering value to customers and stakeholders alike."

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