Milberg Weiss Announces Class Action Suit On Behalf of Purchasers of Kmart Securities

Business Wire, Feb 21, 2002

Business Editors & Legal Writers

NEW YORK--(BUSINESS WIRE)--Feb. 21, 2002

The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on February 21, 2002, on behalf of purchasers of the securities of Kmart Corporation ("Kmart" or the "Company") (NYSE: KM) between May 17, 2001 and January 22, 2002, inclusive.

A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss' website at: http://www.milberg.com/kmart/

The action, numbered 02-70684, is pending in the United States District Court, Eastern District of Michigan, located at 814 Theodore Levin U.S. Courthouse, 231 W. Lafayette Blvd., Detroit, MI 48226, against defendant Charles Conaway. The Honorable Gerald E. Rosen has been assigned to the case.

The Complaint alleges that defendant violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between May 17, 2001 and January 22, 2002, thereby artificially inflating the price of Kmart securities. Prior to and throughout the Class Period, as alleged in the complaint, Kmart and defendant Conaway represented that the Company was engaged in a comprehensive restructuring of the Company's operations which were revitalizing the Company and its sales. The complaint alleges that these representations were materially false and misleading because they failed to disclose and misrepresented the following adverse material facts: (a) that Kmart's purported revitalization was a complete failure as the Company was continuing to lose market share to competitors and the Company's purported efforts to reverse this trend were not meeting with success; (b) that the Company's supply chain management was extremely problematic as the Company's distribution centers were outdated and inefficient and the Company's supply chain software was plagued by bugs and glitches, which were causing the Company to experience inventory problems. As a result of these supply chain management issues, the Company was experiencing difficulties routing inventory to stores, thereby negatively impacting the Company's sales; and (c) that the Company was experiencing substantial liquidity problems which would necessitate a major restructuring of the Company's operations and possibly a bankruptcy filing, which ultimately happened.

On January 22, 2002, Kmart issued a press release announcing that it had filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code According to the press release, the Company's decision to seek "judicial reorganization" was based on a "combination of factors, including a rapid decline in its liquidity resulting from Kmart's below-plan sales and earnings performance in the fourth quarter..." Following this announcement, the price of Kmart common stock dropped from $1.74 per share to $0.70 per share, a one day decline of 59%, on extremely heavy trading volume.

If you bought the securities of Kmart between May 17, 2001 and January 22, 2002, you may, no later than April 22, 2002, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Milberg Weiss Bershad Hynes & Lerach LLP, or other counsel of your choice, to serve as your counsel in this action.

Milberg Weiss Bershad Hynes & Lerach LLP, a 190-lawyer firm with offices in New York City, San Diego, San Francisco, Los Angeles, Boca Raton, Seattle and Philadelphia, is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of World War II and other human rights violations, and has been responsible for more than $30 billion in aggregate recoveries. The Milberg Weiss Web site (http://www.milberg.com) has more information about the firm.

If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following attorneys:

Steven G. Schulman or Samuel H. Rudman

One Pennsylvania Plaza, 49th fl.

New York, NY, 10119-0165

Phone number: (800) 320-5081

Email: Kmartcase@milbergNY.com

Website: http://www.milberg.com