NEW YORK, March 6, 2002 (PRIMEZONE) -- A class action complaint has been filed in the United States District Court for the Eastern District of Michigan, civil action number 02-70241, on behalf of all persons or entities who purchased Kmart Corporation ("Kmart" or the "Company") common stock (NYSE:KM) between May 17, 2001 through January 22, 2002, both dates inclusive (the "Class Period"). Charles Conaway, Kmart's Chairman and Chief Executive Officer, is the named defendant in the action. Kmart is not named in this action because of its bankruptcy filing.
The Complaint alleges that defendant violated Section 10(b) of the Securities and Exchange Act of 1934 by issuing a series of materially false and misleading statements about the Company's financial results announced during the Class Period, thereby artificially inflating the price of Kmart securities. Prior to and throughout the Class Period, as alleged in the Complaint, Kmart and defendant Conaway represented that the Company was engaged in a comprehensive restructuring of the Company's operations which was revitalizing the Company and its sales.
The Complaint alleges that these representations were materially false and misleading because they failed to disclose and misrepresented the following adverse material facts: (a) that Kmart's purported revitalization was a complete failure as the Company was continuing to lose market share to competitors and the Company's purported efforts to reverse this trend were not meeting with success; (b) that the Company's supply chain management was extremely problematic as the Company's distribution centers were outdated and inefficient and the Company's supply chain software was plagued by bugs and glitches, which were causing the Company to experience inventory problems and as a result of these supply-chain management issues, the Company was experiencing difficulties routing inventory to stores, thereby negatively impacting the Company's sales; and (c) that the Company was experiencing substantial liquidity problems which would necessitate a major restructuring of the Company's operations and possibly a bankruptcy filing, which ultimately happened.
On January 22, 2002, Kmart issued a press release announcing that it had filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code According to the press release, the Company's decision to seek "judicial reorganization" was based on a "combination of factors, including a rapid decline in its liquidity resulting from Kmart's below-plan sales and earnings performance in the fourth quarter ... ." Following this announcement, the price of Kmart common stock dropped from $1.74 per share to $0.70 per share, a one day decline of 59%, on extremely heavy trading volume. Plaintiff is represented by the law firm of Rabin & Peckel LLP. Rabin & Peckel LLP and its predecessor firms have devoted its practice to shareholder class actions and complex commercial litigation for more than thirty years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States. You can learn more information about Rabin & Peckel at www.rabinlaw.com.
If you purchased Kmart common stock during the Class Period described above, you may, no later than April 22, 2002, move the Court to serve as lead plaintiff. To serve as lead plaintiff, however, you must meet certain legal requirements. You can join this action as a lead plaintiff online at www.rabinlaw.com. If you wish to discuss this action further or have any questions concerning this announcement, or your rights or interests, please contact plaintiff's counsel, Eric Belfi or Maurice Pesso, Rabin & Peckel LLP, 275 Madison Avenue, New York, NY 10016, by telephone at (800) 497-8076 or (212) 682-1818, by facsimile at (212) 682-1892, or by e-mail at email@rabinlaw.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca