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February 04, 2002 01:00 AM

Suppliers cautious as Kmart rebuilds

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    Kmart Corp.'s Chapter 11 filing has housewares suppliers waiting for a Blue Light redesign.

    Plastics company officials expressed relief at knowing where the retail giant is headed since its bankruptcy filing, but said they will be waiting for the chain to find its niche. Wal-Mart Stores Inc. has ``Everyday low prices.'' Target Corp. is more upscale. Kmart trails behind with a jumble of designer lines.

    ``If they find a viable position strategy, that would give us encouragement that there's long-term survivability,'' said Richard Martz, president of injection molder Stylette, based in Oakdale, Pa. ``That would affect how aggressive a posture we would want to take in pursuing additional business at Kmart. We will continue to ship to them under the debtor-in-possession, but we're going to be very anxious to hear what their strategy will be.''

    Last week, Troy, Mich.-based Kmart secured a $2 billion debtor-in-possession financing package from Credit Suisse First Boston, Fleet Retail Finance Inc., General Electric Capital Corp. and J.P. Morgan Chase & Co. The financing must be approved by the bankruptcy court. Kmart expects to emerge from Chapter 11 by 2003.

    Kmart was all the buzz at the International Housewares Show, held Jan. 13-15 in Chicago. Some suppliers maintained that bankruptcy might be the best thing for the company.

    Others, such as Janet Kulzer of B&R Plastics Inc., were grateful they were not doing business with Kmart.

    ``There's no way we could eat a loss of a quarter million or so, like I'm sure some companies will have to do,'' said Kulzer, national sales manager of housewares for the Denver-based injection molder.

    Others said that, although bankruptcy is not the best scenario, they will stand by the retailer 100 percent.

    ``We are continuing to ship to them,'' said Bud Lindman, executive vice president of Basic Line Inc., based in Perth Amboy, N.J. ``We never shut them off. We have supported them and stood by them through thick and thin. But we were extraordinarily cautious in dealing with their credit-worthiness in the last 30 days.''

    A.J. Riedel, a housewares market analyst based in Phoenix, said some suppliers cannot afford not to do business with the chain.

    ``Kmart still did $3.7 billion in business last year,'' she said in a Jan. 24 telephone interview. ``They're still the No. 2 housewares retailer.''

    Still, the effect on suppliers is substantial.

    ``There could be some vendors that can go under because of this,'' she said, although she has not heard of any specific cases. ``It was a tough year anyway for some vendors.''

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