Kmart Bankruptcy

Kmart's bankruptcy in January 2002 marked the largest retail failure in U.S. history. Originally launched from the Kresge dime store empire in 1962, Kmart's rapid growth eventually faltered due to neglected store maintenance and inefficient supply chain development. By 2000, under CEO Charles Conaway, aggressive pricing strategies intended to compete with Wal-Mart led to a liquidity crisis, worsened by misleading financial communications and poor seasonal sales in 2001. This crisis forced Kmart into bankruptcy. Post-bankruptcy, hedge fund manager Edward Lampert acquired substantial Kmart debt which he then converted to equity and  brought the company back to the public markets.  In the public markets, Kmart’s stock surged. Analysts wondered if the valuation was due to Kmart's valuable real estate portfolio or genuine operational improvements.