Staff Staff -- Furniture Today, September 24, 2001
Kmart details operations overhaul
Kmart Corp. said it will overhaul key aspects of its overall operations, focusing on supply chain infrastructure and its distribution network.
Picking up the tab for the restructuring, Kmart said it will record special charges totaling about $195 million — $124 million on an after-tax basis — over the next three fiscal quarters.
"Reconfiguration of the distribution center network entails the replacement of two aging distribution centers with two state-of-the-art facilities, which will improve productivity and the flow of goods to nearly half of our stores," said Chuck Conaway, chairman and ceo.
As part of the restructuring the retailer said it will put in place new operating software across its entire supply chain.
About $130 million of the charges are pegged to supply chain software and hardware that will no longer be used and to accelerate depreciation of assets. Another $65 million is tied to the cost of getting out of outdated DCs. Cash outlays will be about $45 million. Most of the special charges, about $150 million, will be recorded in the current third quarter.
"Implementation of the program will begin this month," said Conaway. "In addition, the distribution of slower-moving goods will be centralized to one newly-designated center to improve efficiency across all other centers and facilitate the expansion of our BlueLight Always program."
Target board adopts anti-takeover plan
The board of directors of Target Corp., the Minneapolis-based retailer, have adopted a shareholder rights plan to protect the company against a potential hostile takeover.
The new plan is substantially the same as an older protection package that expires on Sept. 26, and the company said it's designed to protect the rights of the company's 15,000 shareholders in the event of an unsolicited takeover attempt. The company said the new plan was not put in place in response to any present effort to acquire Target.
The new plan discourages a potential takeover by granting current shareholders the right to acquire a form of preferred shares if any third party accumulates 20 percent or more of the retailer's common stock. Once that trigger is reached, a current shareholder would be able to buy $250 of Target stock for $125.
J.C. Penney to raise up to $600 million through notes sale
J.C. Penney, the Plano, TX-based retail giant, is hoping to raise upwards of $500 million through the sale of convertible subordinated notes in a private placement.
The total could climb to $600 million if an option for an additional $100 million is exercised in full.
The company said the proceeds will be used primarily to retire debt that matures shortly.
The notes will be offered to qualified institutional buyers and to off-shore investors. The new notes are expected to mature in seven years, the retailer said, and will not be callable until September 2004. The notes will be convertible into Penney common stock at the option of the holder, at a price to be determined.
Sears comes to aid of relief workers
Responding to calls for donations to aid relief efforts in New York and Washington, Sears, Roebuck and Co. employees and customers have given $1 million to the American Red Cross.
Moreover, Sears said it will continue to accept contributions at its stores through Oct. 11.
The customer and employee donations are in addition to a $1 million corporate contribution Sears pledged last week. Additionally, Sears said it has donated hundreds of thousands of dollars worth of merchandise to assist emergency response workers, some of it contributed directly by Sears stores along the East Coast.
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