Newspaper article THE JOURNAL RECORD

Spinoffs Posed for Subsidiaries of Kmart Corp

Newspaper article THE JOURNAL RECORD

Spinoffs Posed for Subsidiaries of Kmart Corp

Article excerpt

TROY, Mich. _ Kmart Corp. Chairman Joseph Antonini said Tuesday the retailer is considering selling minority interests in some of its specialty store subsidiaries to give shareholders a higher return on their stock.

Antonini, speaking at the retailer's annual meeting, also lamented his company's 81 percent plunge in first-quarter profits. He told shareholders, "We'll make it up to you."

But he warned, "We've got a rough road to go."

Antonini told reporters after the meeting Kmart was looking at partial spinoffs as one way of increasing shareholder returns. He said Kmart has $4.5 billion in value in its seven subsidiaries, but is realizing only half of that amount.

"So we think by spinning it off, we'll create the other $2 billion in value," he said.

Kmart's specialty stores include PayLess Drug Stores, The Sports Authority, OfficeMax, Builders Square, Pace Membership Warehouse, Walden Book Co. and Borders books. Builders Square has two stores in Oklahoma City and Walden Books has seven stores.

Although Antonini did not mention any specific subsidiary, the financial community views The Sports Authority as a candidate for stake sale because there recently has been stock market interest in sporting goods stores, said Orren Knauer, Kmart director of investor relations.

Knauer said selling stock in subsidiaries could also give employees the chance to become shareholders and provide a new incentive for them to improve store profits. He said Kmart would retain a majority holding in any subsidiary it might decide to spin off. …

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