NEW YORK, March 8, 2002 (PRIMEZONE) -- The law firm of Wechsler Harwood Halebian & Feffer LLP ("Wechsler Harwood") announces that a class action has been commenced in the United States District Court for the for the Eastern District of Michigan on behalf of all purchasers of the common stock of Kmart Corporation ("Kmart" or the "Company") (NYSE:KM) from May 17, 2001 through January 22, 2002, inclusive (the "Class Period").
The Complaint alleges that defendant violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between May 17, 2001 and January 22, 2002, 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 were 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(b) that the Company's supply chain management was extremely problematic as the Company's distribution centers were outdated and inefficient and the Company's supply chain software was plagued by bugs and glitches, which were causing the Company to experience inventory problems. 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 seeks to recover damages on behalf of class members.
If you are a member of the Class described above, and if you meet certain other legal requirements, you may, no later than April 22, 2002, move the Court to serve as a lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff."
The requirements for serving as a lead plaintiff are set forth in the Private Securities Litigation Reform Act of 1995 (15 U.S.C. section 78u-4). You may move the Court to serve as lead plaintiff through counsel of their choice (and need not necessarily do so through plaintiff's counsel). (15 U.S.C. 78u-4(a)(3)). At this stage, providing information or communicating with counsel is unnecessary to participate in any recovery resulting from this litigation.
Wechsler Harwood has taken a leading role in many important actions on behalf of defrauded shareholders. The Wechsler Harwood website (www.whhf.com) has more information about the firm. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following:
Wechsler Harwood Halebian & Feffer LLP 488 Madison Avenue, 8th Floor New York, New York 10022 Toll Free Telephone: (877) 935-7400
Patricia Gutieau, Wechsler Harwood Shareholder Relations Department: pguiteau@whhf.com
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca