Originally Posted by
GPCharles
Then Chairman Ben Fauber killed Kmart [[the correct spelling, by the way) with his diversification policy in the mid to late 1980s. The analysts told him there was no growth left in the discount store industry, so he ignored the core business and bought into, among others, Furrs Cafeterias, Builders Square, Sports Authority, Walden Books and Borders and started a few others, such as Designer Depot, Bargain Harold's and Office Square. Designer Depot was supposed to compete against T.J. Maxx and Marshall's - what a joke. The buying agreement for Designer Depot went to litigation and resulted in a $60+ M judgment against Kmart. The corporate guarantees on all of the Builders Square leases were real killers. The two guys that ran Builders Square really took Fauber to the cleaners. He paid top $ for a 9 store chain that had one foot in bankruptcy court and expanded it to over 100 stores, competing against industry segment killer Home Depot. Interesting in that the head of Home Depot, Bernie Marcus, and the head of Builders Square, Frank Denny, both came out of W.R. Grace's home improvement chain.
Someone needs to write a book on Kmart's fall from the top.