On Nov. 17, 2004, Kmart announced the purchase of Sears (FCW, Nov. 29/Dec.6). I thought it was a misprint. Kmart came out of bankruptcy in mid 2002 and was a much smaller retailer after shedding 600 stores. Kmart? No way! Yes way. This is really a story about Edward (call me Eddie) Lampert, not about Kmart. Eddie (actually, his company ESL Investments) bought gobs of stock at around 14 dollars when Kmart came out of bankruptcy. His company owns 52 percent of Kmart stock, and that's how Eddie became its chairman. Apparently the stock market believes in Eddie Lampert. In the last two years Kmart stock has gone from 14 dollars to 100 dollars. Even as the company continues to record double-digit sales declines quarter after quarter, it is still profitable thanks to Eddie's cost slashing.
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