Kmart's 1st quarter losses total $1.45 billion

6/15/2002

DETROIT - Kmart Corp. lost $1.45 billion in the first quarter and the firm's sales dove more than 8 percent, in the first full financial quarter since the discount retailer filed for federal bankruptcy protection.

Kmart's heavy losses were the result of reorganization items, including store closings, and mark the second straight quarter of billion-dollar-plus losses.

Its loss amounted to $2.88 a share for the 13-week period ended May 1, in contrast to a loss of $233 million, or 48 cents a share, a year ago. Kmart filed for protection from its creditors under Chapter 11 of the federal bankruptcy laws on Jan. 22.

James B. Adamson, Kmart chairman and chief executive, said the losses were significant, but said the company is making progress, particularly in addressing in-stock levels and customer service.

Net sales for the quarter were $7.64 billion, down from $8.34 billion in 2001. Sales at stores open at least a year declined 8.8 percent from the first quarter of 2001. The same-store sales decline was 11.7 percent, excluding the 283 stores that were closed this year.

Kmart's latest loss was the second consecutive quarterly loss exceeding $1 billion. For the fourth quarter of 2001, Kmart lost $1.5 billion, or $3.49 per share.

The Troy, Mich.-based company posted a loss of $2.42 billion, or $4.89 per share, for all of 2001.

In the latest quarter, Kmart recorded a $265 million charge for reorganization items, including a store-closing charge of $233 million for lease terminations and other costs.

Excluding nonrecurring and reorganization items, Kmart lost $408 million, or 81 cents per share, in the quarter.

Analyst Ulysses A. Yannas, with Buckman, Buckman & Reid, said the results were not surprising because of the store liquidation and other bankruptcy-related matters.

More telling, Mr. Yannas said, will be the next quarter. “I'd be watching carefully July, August, September. ... That will tell you the true story,” he said.

Eric Beder of Ladenburg, Thalmann & Co., Inc., said the results are typical of a firm in its early stages of bankruptcy. “I think it shows there are still problems there, there are things that need to be worked out,” Mr. Beder said.