Kmart posts losses after Ch. 11 filing

Don Hogsett, April 8, 2002

TROY, MI — In the first nine days after filing for Chapter 11 bankruptcy protection late in January, giant discounter Kmart Corp. recorded a loss of $579 million, and in the four weeks following lost another $174 million, bringing its total losses through Feb. 27 to $753 million.

The retailer put out the numbers in a filing with the federal Securities and Exchange Commission late in March, and it marked the first time the retailer has released any financial data since its bankruptcy filing. The company has put off releasing financial results for the fourth quarter and all of 2002 until a later, unspecified date.

Contributing to the nine-day loss of $579 million in the closing days of January just before it made its bankruptcy filing, the retailer said it incurred $311 million in bankruptcy and restructuring charges, as well as an income-tax expense of $815 million.

Kmart said it put up $2.2 billion in sales during February, but also noted that the crucial gauge of same-store sales, the acid test of a retailer's performance, dropped by 10.8 percent during the month as consumers shied away from its stores. In stark contrast, rival Wal-Mart Stores posted a larger-than-expected increase of 10.3 percent in same-store sales, doubtless pulling customers away from Kmart. Target discount stores also gained on Kmart's misfortune, its same-store sales rising by 10 percent for the month.

KEY FEBRUARY RESULTS

Sales $2.2 billion
Average gross margin 17.5%
SG&A expenses 24.2%
Operating loss $147 million
Bankruptcy costs $16 million
Restructuring & other costs $2 million
Interest expense $9 million
Net loss $174 million

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