K Mart's Blue Period

The No. 2 discounter struggles while triumphant Wal-Mart weighs an expansion into banking

If turnarounds were fashion, K Mart would never go out of style. The discounter has spent the better part of a decade reorganizing itself. The latest--and maybe the last--effort is being led by Charles Conaway, 41, whom the company plucked from drugstore chain CVS 18 months ago. Late last week the company's stock was pummeled, dropping 14%, to $4.71, after Prudential Securities retailing analyst Wayne Hood suggested in a report that bankruptcy would not be a bad move for K Mart. A Chapter 11 filing would allow the company to walk away more easily from the leases of underperforming stores and...

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