BALA CYNWYD, Pa., March 8, 2002 (PRIMEZONE) -- A shareholder sued Kmart Corporation ("Kmart" or the "Company") (NYSE:KM) claiming that the company misled investors about its business and financial condition, as alleged in a complaint filed by the law firm of Schiffrin & Barroway, LLP.
The complaint was filed in the U.S. District Court for the Eastern District of Michigan and seeks damages for violations of federal securities laws on behalf of all investors who bought Kmart Corporation securities between May 17, 2001 through January 22, 2002 (the "Class Period").
Schiffrin & Barroway, LLP has prosecuted shareholder class actions for over fourteen years and has recovered more than $1 billion for investors. If you are a shareholder of Kmart Corporation and want to learn more about this lawsuit and about becoming a lead plaintiff, you may visit our website at www.sbclasslaw.com.
The complaint alleges that Kmart Corporation 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(b) that the Company's supply chain management was extremely problematic as the Company's distribution centers were outdated and inefficient and the Company's supply chain software was plagued by bugs and glitches, which were causing the Company to experience inventory problems.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.
If you purchased Kmart Corporation securities between May 17, 2001 through January 22, 2002, you may be a member of the class and have until April 22, 2002 to move the court to become a lead plaintiff. To learn more about your rights and interests in this case and your ability to potentially recoup your losses, please contact Schiffrin & Barroway directly at 888-299-7706 (toll free) or 610-822-2221, fax number 610-822-0002, e-mail at info@sbclasslaw.com or visit our website at www.sbclasslaw.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca