Kmart 3Q: losses & sales decline, margins rise
December 5, 2003-- Home Textiles Today,
Kmart 3Q: losses & sales decline, margins rise Troy, MI — Kmart today reported a loss for the third quarter ended Oct. 29 of $23 million, or 26 cents per share vs. a loss of $383 million for the year-ago period.
Comps declined 8.6 percent, primarily because the company was running more promotional events a year ago and has reduced circular frequency. Sales dropped 21.2 percent to $5.1 billion, a performance the company attributed to the comp decline and the closure of 316 stores during the first quarter of 2003.
Gross margin increased $61 million to $1.167 billion. As a percentage of sales, gross margin jumped to 22.9 percent from 17.1 percent. The bump was produced by lower distribution costs as Kmart began in-sourcing food and consumables as well as lower depreciation expense and the write-off of long-lived assets related to Fresh Start accounting. In addition, gross margin benefited from the reclassification of co-op advertising dollars, which are now recorded under cost of sales, buying and occupancy.
“The actions we have taken to drive profitability contributed to a mid-teens decline in November same-store sales, but allowed us to operate the company profitably in November 2003,” said Julian Day, president and ceo.