Today in Wall Street History: Kmart Files For Chapter 11 Bankruptcy Protection

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In 1912, Kresge incorporated the S.S. Kresge Company in Delaware with 85 stores.

After World War II, America’s unbridled consumerism demanded larger, more expansive stores selling almost every variety of product. The first full-size Kmart opened on March 1, 1962, in Garden City, Michigan.

Customers went to Kmart expecting discount prices, along with other perks such as Kmart shaped many shoppers’ habits with Blue Light Specials, customer dining areas and the option of buying on layaway.

In 1965, the Blue Light Special was first announced over the store public address system with the phrase "attention Kmart shoppers."

Kmart's profitability and sales peaked in 1992 and its store count hit 2,323 in 1994. Yet, in Nov. 1990, Kmart was passed by Walmart as the second-largest retailer in the U.S. after Sears.

Kmart had shifted its focus to purchasing other chains such as Builders Square, Borders Books and Sports Authority — all of which have gone defunct. Additionally, unlike its competitors Walmart and Target, Kmart failed to invest in computer technology to manage its supply chain.

Furthermore, Kmart maintained a high dividend, which reduced the amount of money that was available for improving its stores. Many of Kmart's stores were considered to be outdated and in decaying condition.

Kmart filed for Chapter 11 bankruptcy protection in 2002 under the leadership of its then-chairman Charles Conaway and president Mark Schwartz. Conaway and Schwartz were accused of misleading shareholders about the company's financial crisis.

In November 2004, Kmart's management announced its intention to purchase Sears for $11B; the two merged into Sears Holdings.

Sears Holdings filed Chapter 11 bankruptcy in 2018.

The sale of 202 Kmart stores to Transform Holdco was finalized in 2019, with the remaining Kmart locations liquidated to partially pay off Sears Holdings creditors.

As of May 9, 2020, 34 Kmart stores are left in the continental U.S.

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