Kmart shares plunged to a 35-year low today after Standard & Poor's said it would drop the discount retailer from its S&P 500 index, as bankruptcy worries mounted amid the company's silence following a board of directors meeting.
Investors and analysts had hoped that Kmart would disclose how it will address Wall Street's concerns about a possible bankruptcy following a meeting of the company's board of directors. So far, the company has not issued a statement.
Calls to Kmart today were not immediately returned.
The second-largest US discount retailer has been losing the fierce competitive battle with rivals Wal-Mart Stores and Target, especially over the recent Christmas shopping period when its sales were disappointing.
Kmart shares fell as low as $1.40, off $1.05 or 43 per cent, in morning New York Stock Exchange trading, a level unseen since December 1966, according to data from Standard & Poor's that has been adjusted for stock splits. More than 38 million shares changed hands.
Since the beginning of the year Kmart shares have lost more than two-thirds of their value, wiping nearly $1 billion off its market capitalisation.
"The stock is trading on pure emotion," said Mr Eric Beder, retail analyst at Ladenburg, Thalmann & Co.
"They've needed to say something for weeks. If Kmart is not going to declare Chapter 11, they need to come out and forcefully say that," he added.
Kmart said last week it was in talks seeking additional financing from its lenders and was reviewing its business plans for 2002 and 2003.
One analyst said the company is probably tending to details before releasing a statement.