Kmart exec found guilty
Ajury has found Charles Conaway, Kmart’s former CEO, guilty of misleading investors about the retailer’s finances during a 2001 conference call, according to wire reports. The June 1 verdict, handed down on civil fraud charges filed by the Securities and Exchange Commission, followed 10 days of testimony in an Ann Arbor, Mich., federal court.
The SEC accused Conaway of failing to disclose that Kmart was delaying payments to its vendors to conserve cash flow. Conaway testified that he didn’t consider the matter pertinent to shareholders, nor did he feel obligated to disclose the purchase of $800 million in inventory and its effect on Kmart’s finances.
The discount retailer, which is now part of Sears Holdings, filed for Chapter 11 bankruptcy protection in 2002.
Conaway’s lawyer told the Associated Press that his client would pursue an appeal.
Blake addresses China, Chile and more
Home Depot CEO Frank Blake told shareholders that the company knows it needs to improve its merchandising efforts but has taken great strides in the last 18 to 24 months. The company’s new lower price program, launched in 2008, “has been very successful and will continue as a core part of the business,” Blake told shareholders.
During the company’s annual shareholders meeting, Home Depot’s board of directors declared a first-quarter cash dividend of 22.5 cents per share. The company pointed to the string of 89 consecutive quarters in which a cash dividend was paid.
Perhaps the highlight of the shareholder event was the question-and-answer session, where Blake responded to a variety of shareholder questions and comments.
One shareholder questioned whether Home Depot board members Armando Codina and Karen Katen, who are also board members at General Motors, are being distracted by events at the troubled auto maker. The shareholder also expressed concern over “business acumen” of the GM board, generally. Blake described the board members as “extremely, extremely intelligent folks.” He added: “I can personally tell you that they have never been unavailable to me when I reach out for help, thoughts and suggestions.”
Another shareholder asked when Home Depot would finally take serious advantage of the Chinese market, where Home Depot has 12 stores. Blake agreed with the enormous potential but explained some differences in lifestyle, distribution and the DIY concept and expressed a policy of corporate caution.
He added: “We’re not there just to have 12 stores. That doesn’t make much sense. So, over the next months and year, we’ll figure out either how we make a successful business in China or not.”
Blake, who recently expressed concern over home foreclosure statistics, agreed with one questioner that there is opportunity for Home Depot to benefit from houses coming out of foreclosure.
During one part of Frank Blake’s business discussion, a heckler interrupted, protesting a controversial dam project in Chile.
Blake said he would meet with groups attempting to protect Chilean forests from Patagonian dams. He added: “This is fairly far removed from our business. I can understand why the well-meaning folks who are interested in this issue would want to leverage the Home Depot relationship, but I’m not sure that it’s appropriate for the Home Depot to be getting in the midst of Chilean energy policy.”
Ace store will open at struggling Washington mall
Anew Ace Hardware store is set to open this summer at Eastgate Mall in Walla Walla, Wash., according to an article in the Walla Walla Union-Bulletin.
The 21,300-sq.-ft. store, which will take up four vacant spaces in the mall, will be opened by Doug and Linda Henry, who also own Henry’s Ace Hardware in Milton-Freewater, Ore.
Construction should be completed by mid-July with a soft opening in September and a grand opening targeted for October, the article said.
The retail spaces being used for the new store have been empty for more than two years. About 15 people are expected to be employed there within the first year.