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TROY, MICH.--The rumors that Kmart would be swept by the same tide that sent Bradlees, Caldor, Jamesway and Prange Way into bankruptcy court protection died a quick death.
Talk about a bankruptcy petition was initiated by commentary from CNBC pundit Dan Dorfman and then further fueled by speculation in the Wall Street Journal's "Heard on the Street" column under the headline "Kmart should consider a Chapter 11 filing as best vehicle for drastic changes, some say."
The suggestion, which turned out to be groundless, sent shock waves through the discount store industry and set the "what if" speculators into high gear considering Kmart's vast real estate lease holdings and the impact on its vendor partners.
According to the Journal column, Smith Barney analyst Richard Church had "been talking about the idea with clients." It was also reported that Church said that a bankruptcy filing would be "'an efficient way to make the kinds of drastic changes Kmart needs, such as closing 'a few hundred' of its 2,163 stores." According to the article, Dorfman reported on CNBC that some of Kmart's suppliers were "nervous." Kmart called the reports "inaccurate" and "misleading" and sent letters to all of its vendor partners signed by chairman, president and ceo Floyd Hall, attesting to the company's strength and commitment to improved operations.
Kmart also announced plans to meet with the investment community in late October and early November "so that Hall and the company's management can further discuss the company's progress and plans," according to a Kmart press release.
A copy of the letter dated Oct. 18, which Hall gave to DSN, stated that the "steady progress towards improving...