Kmart struggles continue in June with $137M loss
July 29, 2002-- Home Textiles Today,
Struggling Kmart Corp. recorded a $137 million loss during the month of June, sharply higher than the $96 million deficit recorded during May.
In a filing with the Securities and Exchange Commission, the retailer reported June sales of $2.3 billion, down almost 10 percent from $2.6 billion taken in at the register during May. Same-store sales in June tumbled by 8.6 percent, improving somewhat on a drop of 11.4 percent the month before.
Contributing to the widening June deficit the retailer ran up $22 million in Chapter 11 reorganization expenses, including $11 million in professional fees; $8 million in employee retention bonuses; and $3 million in miscellaneous reorganization expenses. But acting as an offset was $10 million in reorganization income derived from the settlement of leases on 10 of the 283 stores that were closed in June.
Through the first six months of the year, since filing for bankruptcy protection on January 22, Kmart has rung up losses totaling $2.3 billion. Sales for the same six-month period totaled $13.2 billion, indicating that Kmart has been losing roughly $0.15 on each dollar of sales.
Exacerbating Kmart's losses are plunging same-store sales, which have now fallen off at a double-digit pace for four of the past six months.
Over the course of the past six months, average gross margin has held relatively steady, coming in at 17.0 percent in June, compared with 16.8 percent in January. The big exception was a negative gross margin of 3.2 percent rung up in April during the midst of inventory liquidation sales.
In one notable area of improvement, operating costs have been sharply reduced, to 21.9 percent of sales in June from a high of 28.2 percent in January.
Illustrating that bankruptcy and lawyers don't come cheap, Kmart has now rung up a total of $490 million in bankruptcy costs.
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