Kmart stock soaring on reports of profit
Staff Staff -- Home Textiles Today, January 12, 2004
Clamping down on inventory levels while eliminating money-losing promotions, Kmart Holdings Corp. said it expects to record a profit in excess of $250 million for November and December, despite a double-digit slide in same-store sales.
That could point to the retailer's first profitable quarter since emerging from bankruptcy in May and a strong rebound from a $1.1 billion loss from the prior-year quarter.
Cheered by the unexpectedly positive news, investors ignited a rally in the retailer's stock, sending it soaring by 26.6 percent in value, or $6.12 a share, to $29.12 in frenzied trading on the New York Stock Exchange.
The one-day run-up on Monday, Jan. 5 provided a $250 million windfall for Kmart Chairman Edward S. Lampert, whose ESL Investments owns more than half of Kmart; about 12 percent of Sears; and a dominant position in the bonds of WestPoint Stevens, making him potentially the controlling shareholder when it emerges from bankruptcy.
Kmart also reported that same-store sales had fallen by 13.5 percent during the holiday period. Total sales, the company said, declined about 26.1 percent to $5.1 billion from $6.9 billion, hit by falling same-store sales and the shutdown of 316 stores.
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