K-Mart Bankruptcy and Revival

Even the biggest of corporations can fail , only to rise again, stronger than ever before. That is the lesson that the K-Mart saga of bankruptcy and revival teaches us.
Started in 1962 by Sebastian S. Kresge, one-time supplier to Frank Woolworth who founded the Woolworth chain of discount stores, K-Mart grew rapidly /speedily /swiftly /rapidly@#$ n the 1970s, and quickly established itself as the third-largest retailer in the country behind Wal-Mart and Target. However, the companies fortunes began to change in the late 1980s with a series of poor management decisions which drastically pulled down sales.
Some of these decisions were non-adoption of computer technology and failure to create a distinct brand image. While its competitors benefited from the advances in computing, K-Mart languished in the analog age. Moreover, unlike Wal-Mart that competed on price and Target whose USP was style, K-Mart failed to develop a niche among customers. These poor strategic decisions continued into the early 2000s when its then-chairman and CEO Chuck Conaway reduced advertisement spending in 2001, thereby alienating customers.
However, what broke the camels back was the financial mismanagement of Conway and then-president Mark Schwartz. Conway had earlier come on board after his successful stint at CVS Corporation and had negotiated a $5 million loan as joining incentive. In 2002, in a scandal reminiscent of Enron a year earlier, the pair of Conway and Schwartz were accused of misappropriating company funds for their personal expenses.
Instead of disclosing millions in income and revenues, the two were allegedly spending the company's money on different kinds of luxuries such as boats, houses and airplanes. On 22 January 2002, Conway addressed K-Marts employees and accepted "full blame" for the financial disaster. The same day, the company filed for bankruptcy, which still stands as the biggest ever for a retailer. Conway was forced to resign but subsequently recalled and asked to repay the money he had taken from the company.
Now started K-Marts amazing turnaround. The company which had gone through a long period of sloth while its competitors grew, now made several changes during the Chapter 11 restructuring process. It renegotiated leases, closed more than 300 stores and laid off around 34,000 workers to trim costs. Billionaire investor Edward Lampert bought K-Mart bonds during its bankruptcy, from which it soon emerged on 6 May 2003 as the K-Mart Holdings Corporation. The company started trading on the NASDAQ under the "KMRT symbol and Lampert gained management control of the company.
The wheel came full circle when K-Mart Holdings Corporation under Lampert announced its intention to purchase Sears, Roebuck and Company for $12.3 billion in November 2004. Under the terms of the merger, the new entity no carries the name Sears Holdings Corp and trades on the NASDAQ under the "SHLD" symbol. In addition, both K-Mart and Sears also operate stores under their respective brands. As per the latest filing, the conglomerate, with 337,000 employees, had a net income of $53 million on revenues of $46.8 billion in 2009.

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Source: Goarticles.com