Conference nyoss1::market_investing

    They were in the news last week (closing stores, restructuring) in
    case you want to check out the WSJ/ID/other business rags for articles
    and maybe some recommendations, one way or the other, from retail
    experts.  I think Business Week featured an article this week;
    probably others weeklies did too.

    Forbes did an article on K-Mart and Montgomery Ward, two department
    store giants that have done poorly.  Form memory, they suggested that
    K-Mart had done lots of things right but lacked the differentiation and
    market place momentum to beat Walmart.
    
    In the case of Montgomery Ward they were laying the problems on their
    CEO, who is often compared to Atilla the Hun.
    
    

Some observations:

1. I stopped in Office-MAX (owed by Kmart). Their prices seems to
   be higher then Staples. 

2. Walmart has a 2-4% advantage in operating margin over K-Mart. Their
   ordering/inventory processes are highly automated.  The K-Mart
   in Acton was only recently converted over to scanner.

3. The Acton Kmart always seem to be out of items - poor inventory
   control?

4. Dividends can always be cut. If IBM did it, why can't Kmart?
   Look at your note from 1/93.


         <<< SUBWAY::DISK$LIB:[NOTES$LIBRARY]MARKET_INVESTING.NOTE;1 >>>
                         -< Market Investing >-
   =========================================================================
   Note 346.15                  IBM stock                           15 of 57
   CSCMA::BALICH                           16 lines   6-JAN-1993 08:23:54.11
                  -< IBM 81/share = 6 % div. yield. >-
   -------------------------------------------------------------------------
    
    Todays close ...
    
    IBM 81, change -1 3/4; DJIA 3266.80, change -9.46 at 16:30.
    Report entered at Tue Sep 29 16:30:53 1992.
    
    Thats a NEW low for the year, and probably for the past couple for that 
    matter AND to top it off, equals to a %6.00 div. yield.
    
    The chances of the stock to go down much further is probably much less
    that for the stock to go up.   If the stock does NOTHING, you still get
    %6.00 yield and if it goes up, its all BONUS!!!
    
    Can't get that in a CD or MM savings account.

Most of the firms that have experienced rapid increases in
capitalization have been accompanied by changes in senior management:

	- Toys-r-us was at one time bankrupted - Charles Lazurus took over.
	  The rest is history.
	- Gault took over Rubbermaid and now Goodyear.
	- John Welch took over from Reginald Jones	
	- Martinez has rebuilt Sears.
        - Ford, Chrysler and GM have all had major changes in
	  senior managmenet.
    	- IBM has increased in value since Gerstner took over.
    

The current management at K-Mart is the same team (Antonini) that diversified
into home supplies (Builder Squares - many stores are closing as
Home Depot moves in), warehouse stores (Pace - now sold to Walmart), office
supplies (Office Max) and sporting goods store.  

Is it reasonable to believe that same management team can remake
Kmart and compete head-on against that discount chain headquartered in
Arkansas?
    
    Gim
    
    

    It is easy to fall into the trap of screening stocks to find those with
    dividend yields greater than 4%, P/E's of less than 12, and prices at
    or near 52 week lows.  At any given time there are probably 20 stocks
    that meet those criteria.  That doesn't make them a good buy.
    
    Stocks will only rise if earnings rise.  If there are no fundamental
    changes in the business to drive earnings growth, the stock price
    will languish.  There is more to picking a winning stock than just
    numbers.  Otherwise, anyone with a PC and stock screening software
    would make a gazillion dollars a year.
    
    

    The only good thing I see in K-Mart right now is there push into the
    superstore area. They opened up a lot of Super-K stores last year and
    have many more planned for this year. The initial report on the
    superstores is very positive. Dollar volumes per sq ft are up compared
    to standard K-mart stores.  In many areas they are replacing aging K-marts
    with 24hr 4.5 acre Super-K's. These 4.5 acre superstores cost $$$$ to
    build. 

      K-Mart is presently going to sell minority stakes in their other
    businesses ( Office Max, Builders Square, ect. ) and spin them off as
    seperate businesses. The new Super K-Marts seem to be received well
    with profits from them exceeding expectations. With the sale of the
    money losing Pace wharehouse stores to Wal-Mart came a big infusion of
    cash to the company. Add to that the increase of traffic at the
    remodeled K-Marts and I think this stock has the potential to climb
    back towards 30.
                                             JRW

	Well KM today reported same store sales increased over 5% (while
	Walmart was like 1%).  And rumors on the st. is KM has worked
	out it's financing problems.

	KM is also a 1996 pick of one of the panalists that was on W$W's
	annual new years show last Friday.  Maybe I sold too soon when
	I sold at ~ $14 :-)

Symbol: KM			Exchange: New York Stock Exchange (NYSE)
Description: K MART CORP COM
Last Traded at: 7 7/8		Date/Time: Jan 04 11:14:46
Previous Close: 7 1/2
$ Change: 3/8			% Change: 5.00
Volume: 1775900			# of Trades: 525
Day Low: 7 1/2			Day High: 7 7/8
52 Week Low: 5 7/8		52 Week High: 17 7/8
Market Cap: 6,796		Beta: 1.47

	Well S&P just lowered Kmart to "junk bond" status....

    Junk bond, hmmm.

    I read in Barron's last week that there was some insider buying
    going on in KMart.  Some 5 officers bought and none were selling.

    Who ya gonna believe?

    Tom

>     Junk bond, hmmm.
> 
>     I read in Barron's last week that there was some insider buying
>     going on in KMart.  Some 5 officers bought and none were selling.
> 
>     Who ya gonna believe?

	The two aren't in contradiction :-)  Downgrading their credit
	rating just makes it more expensive for them to borrow money.

	Digital about 2 years ago I believe was pretty close to a junk
	bond rating, and look at us now :-)

    With KM sliding close to $6 it makes for an interesting turn around
    play. There are only three players in the discount department store 
    business at the national level left (Walmart, Target, and Kmart).
    
    At what price point does KM become a takeover target?
    
    RE .9  S&P lowered KM rating based on its lost market share over the 
    last year, not because they can't pay their bills.

> There are only three players in the discount department store 
> business at the national level left (Walmart, Target, and Kmart).

	I can't find my S&P report for Woolworth right now, but
	are they not a national chain?

> RE .9  S&P lowered KM rating based on its lost market share over the 
> last year, not because they can't pay their bills.

	Who said it was because they couldn't pay their bills?

	I did say (in a subsequent reply, not .9) that because of the
	lower [bond] rating it will make it harder (and potentially more
	expensive) to borrow money because the lower the rating, the higher
	the risk (which is why they are so-called "junk" compared to quality
	bonds ....)

	Ah, now I see the confusion.  I said "credit" rating (in .11)
	when I meant "bond" rating.  Sorry for the confusion ....
	(however I'd consider *any* creditor would consider them higher
	risk if their bond rating is "junk", and in fact CNN HN gave some
	coverage to the home products trade show in Chicago this week and
	manufacuters said they are indeed worried about retailers going
	under after some of them got bit after some other dept. store
	retailers filed chapter 11, ie. caldor and bradlees).

>	I can't find my S&P report for Woolworth right now, but
>	are they not a national chain?

Not only are they a national chain, they're also one of the
Dow Jones Industrials.

Tom

What names does Target operate under?  I've never heard of any Target stores
in New England or New York.

  Target is not quite national.  You will find it outside of the North East.

Target and Mervyn's are divisions of Dayton-Hudson.  
Dayton-Hudson also has a department store division, but I don't 
know the name of the stores, since Target and Mervyn's are 
prevalent where I live.

    re: last few
    
    Woolworth?  Forgot about them as I have not been in or seen a
    Woolworth in so long...
    
    So who are the "players" in the national discount department store market 
    and how do they compare to KM?  Here are the ones I would research and 
    compare KM to before buying.
    
    	Walmart   (Not in all large metro areas yet) 
    	Target    (Not in the Northeast but still expanding, 
    		   Dayton-Hudson parent)
    	K-Mart    (On the ropes)
    	Woolworth
    	Sears	  (Are they considered a discount outlet?)
    
    	 

>     	Sears	  (Are they considered a discount outlet?)

	Not traditionaly but the boundries between discount and full
	service dept. stores is vauge these days (except for names like
	JC Penny [now Macy's] and Jordan Marsh), IMHO :-)

    Woolworth owns Foot Locker, Champs, and I believe a couple more stores.
    				Peter

    I think Jordan Marsh is now Macys and in fact will be changing it's
    name to that pretty soon.  
    
    How does LL Bean look as a stock?

>Dayton-Hudson also has a department store division, but I don't 
>know the name of the stores

Hudson's, for one.  They're one of the biggies in Michigan.

    I believe LL Bean is privately held.
    

    ...and not doing as well as they would like.  No losses yet but sales
    were down.

> Woolworth owns Foot Locker, Champs, and I believe a couple more stores.

	.... which this or late last week has announced that they are
	spinning off those businesses to shareholders!

    After watching K-Mart now for over 2 years I finally decided to buy.
    I sold some DEC last week and picked up K-Mart. They seem to 
    have been stuck in a ~$6-8 trading range for a couple of months now with
    good news moving the stock up and bad news sliding it back to ~$6. 
    I believe they have hit bottom and will finally start to grow again or 
    they will slided right out of business. My purchase price was 5 7/8
    with a good till cancel stop order at $4.
    
    I stated back when this string started (1994) that the only good I saw 
    was their push into the Super-K's. Since then they have dumped their CEO, 
    sold off some businesses purchased by the former CEO, fixed some (not all)
    distribution problems, and Wal-Mart is now having problems penetrating 
    the larger markets. Of course they have had numerous probles also.
    I will check back in from time to time with updates.7    

	FWIW, I believe last week NBR reported that some officier of the
	company (could of been the CEO) said he was going to take his
	$1M bonus and invest it in K-Mart stock.  It didn't move the stock
	up however.

	Maybe investors are asking what this guy is doing getting a $1M
	bonus while shareholders have lost alot of money!

FWIW, KM has a DRIP.

Sorry, feeling a bit acronymic today.  K-Mart has a shareholder dividend
reinvestment program.  10 share minimum to enroll (not too hard to do these
days :-).  800-336-6981 for the transfer agent, and be prepared to wait a few
minutes on hold.

Oh, and if I read my WSJ briefing book right, KM posts quarterly earnings
tomorrow.  If so, I bet today is a good time to get in, and the stop in -1 is
a good idea too.


- jeff_about_to_flip_his_lucky_coin

> Oh, and if I read my WSJ briefing book right, KM posts quarterly earnings
> tomorrow.  

Kerekshin... they post 'em in mid-February (last time was 16 Nov 95).


- jeff_still_thinkin'bout_it.

	Nice one day gain for KM today.  Probably related to this
	news headline off the dbc server:

16:42  [KM]  CONVERTIBLE BOND ISSUE SEEN AS A LIFELINE IN KMART'S SURVIVAL.

Symbol: KM (K MART CORP COM) [NYSE]
Last Trade: 6 5/8, Change 3/4 (12.77%) at Feb 01  5:01:21
Low & High: 6 & 6 5/8 (spread 5/8)
52 Week Low & High: 5 3/4 & 16 1/4 (spread 10 1/2)
Volume/# of Trades: 4664400 / 547 (8527 shares/trade)
Market Cap: 6796.00, Beta: 1.47, EPS Growth: 0.00

Moody's downgraded KM to BB at 11am today.  Hasn't seemed to hit the stock
price at all (yet).

K MART CORP COM (KM)
New York Stock Exchange (NYSE)
Date/Time Feb 02 1:03:16
Last Traded at 7 1/4    Previous Close 6 5/8
$ Change 5/8            % Change 9.43
Volume 4453100          # of Trades662
Day Low  6 5/8          Day High 7 1/4
52 Week Low 5 3/4       52 Week High 16 1/4
Market Cap 6,796  Beta 1.47  EPS Growth*****

Dammit!  I shouda ignored my wife's orders -- and instead played the hunch at
5 7/8 like ::SMITHP  ;-)
 

    K-marts stockholders meeting and QTR earnings are both going to occur
    in the next couple of weeks. We shall see if the new CEO, Floyd Hall, is
    starting to turn this 100,000 ton ship around or not. The next few
    weeks could be the next leg up or down for the stock. I am still
    holding and up'd my GTC stop order from $4 to $8. 

Judging from the lack of traffic in the local K-Mart, I wonder how they
survive. 

There is a big, bright new K-Mart in a new shopping center in the well-off town
of Marlboro, NJ. (Yes, Bay Staters, that's how it's spelled!) The shopping
center also has a big successful supermarket. 

The K-Mart has been there over a year, and when I go in it seems like there are
almost as many employees as there are shoppers. (But unlike a WalMart, the
employees are not solicitous.) Last night I was checking out the jeans that
were on sale, but the merchandise was disorganized. Failing to find my size, I
went over the the Haines rack to look for a size medium tee-shirt. The Haines
rack looked like it had been pillaged by Visigoths on one of their merciless
sweeps out of central Asia, and again I couldn't find what I wanted.

I guess you can't judge by one store, but compare this to a WalMart or Sears
and these guys look doomed to me.

    The K-Mart near my house does a booming business as does the Wal-Mart
    across town.  The other discount merchandisers like Rich's, Caldor, and
    Bradlee's have taken a beating though.  
    
    Brian

    
    
    Good time for an update.
    
    Any retail store in general is very dependent on the store manager. If
    you have a strong store manager, product will be on the shelf, if not
    they never have your size!  There are two K-Marts that I shop at in the
    Atlanta area. One always has what I need and the people are friendly and
    helpful the other is a crap shoot. Both are within 15 miles of each
    other and pull from the same warehouse and employee base. Go figure.  
    
    P.S. I am still holding the shares purchased in .26, I am looking for 
    $20-$24 a share by the year 2000 if Floyd Hall can pull off the store
    makeovers and convert/build more Super-K's. They currently have less
    than 100 Super-Kmarts in the U.S and those produce the best revenue per sq
    ft. Current price is around $12. Of course I have a GTC stop at $9 in
    case Hall doesn't pull it off or the market busts.