Kmart stock downgraded to 'sell'

DETROIT - Prudential Securities Inc. downgraded Kmart Corp.&#39;s stock from &#34;hold&#34; to &#34;sell&#34; on Wednesday, citing disappointing fourth quarter results and the company&#39;s &#34;precarious&#34; cash position.<br> <br> Prudential said it would not be surprised if the Troy, Mich.-based retailer filed for Chapter 11 bankruptcy if trends do not improve in the next six months. Kmart shares dropped 68 cents, or nearly 13 percent, to $4.78 in afternoon trading on the New York Stock Exchange.<br> <br> &#34;You can safely, politely characterize it as a deeply discounted value stock,&#34; said David Sowerby, portfolio manager for Bloomfield Hills, Mich.-based Loomis Sayles Inc. Sowerby said Kmart&#39;s moves to reignite sales are falling flat in the face of stiff competition from Wal-Mart Stores Inc. and Target Corp.<br> <br> &#34;Kmart just seems to be the third choice for consumers behind Wal-Mart and Target because they have cleaner stores, they&#39;re more modern, even better parking lots,&#34; Sowerby said.<br> <br> He pointed out that from December 1991 to December 2001, Target&#39;s stock price increased 696 percent, Wal-Mart&#39;s rose 291 percent, but Kmart&#39;s dropped 77 percent.<br> <br> A call to Kmart for comment was not immediately returned.<br> <br> Kmart said in a recorded message that sales from Dec. 20 to Dec. 26 were &#34;above plan,&#34; with high-ticket items, such as television sets and video game consoles, leading the way.<br> <br> For the month of December, though, the retailer said its sales were &#34;below plan&#34;; the company had anticipated results for the month to be flat or to increase by 2 percent. The company will release complete sales results for the month Jan. 10.<br> <br> In November, Kmart announced a third-quarter loss of $224 million, or 45 cents per share. Excluding a hefty restructuring charge, the nation&#39;s No. 3 retailer lost $127 million, or 25 cents per share, in the quarter.<br> <br> The results beat Wall Street expectations, but in December, Moody&#39;s Investment Service downgraded Kmart&#39;s debt rating to junk status.<br> <br> Kmart Corp., http://www.bluelight.com <br> <br>

http://accesswdun.com/article/2002/1/200708