US discount giant Kmart, who filed for Chapter 11 protection in Chicago last week, has revealed that it will quickly investigate a “vague” allegation of accounting problems.
A letter from employees was sent just days before Kmart filed for bankruptcy to Managers at the retailer, the US Securities and Exchange Commission and PricewaterhouseCoopers, Kmart’s independent accountant. It noted concerns about unspecified accounting matters.
Company spokesman Jack Ferry explained: “We have committed the necessary resources to conduct an investigation as quickly as possible.”
Stuart Sinai, a securities attorney with Kemp Klein, questioned Kmart’s speed., however, telling the Free Press: “Normally when a company gets an anonymous letter, they typically throw it away.
“I can’t believe that they would issue a press release on something that is not material — something that is not going to affect earnings or assets.”
Kmart is currently undergoing an aggressive reorganisation of its finances as it must honour its pledge to turnaround its operations by 31 July, 2003. The company has said it will evaluate store performance and lease terms by 1 May, after which it will close unprofitable or underperforming stores.