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KMART SHARES RISE AS NET LOSS DECLINES
NEW YORK -- Shares of Kmart Holding Corp. rose early last week after the discounter proved that it didn't have such a bad first quarter after all.The company, which emerged from bankruptcy last month, also said its gross margins got a boost in part from a decline in food and consumables sales, which are less profitable than other merchandise."I think everyone is giving this company a short-term grace
Vicki M. Young
June 23, 2003
2 Min Read
Vicki M. Young
NEW YORK -- Shares of Kmart Holding Corp. rose early last week after the discounter proved that it didn't have such a bad first quarter after all.
The company, which emerged from bankruptcy last month, also said its gross margins got a boost in part from a decline in food and consumables sales, which are less profitable than other merchandise.
"I think everyone is giving this company a short-term grace period," said Bob Carbonell, vice president and director of credit, Bernard Sands, New York.
In the three months ended April 30, Kmart's final quarter in Chapter 11, losses exclusive of interest, reorganization costs, taxes and discontinued operations contracted to $32 million from a loss of $920 million in the prior year.
Overall, the loss was down to $862 million, or $1.65 a share, from $1.44 billion, or $2.87, in the 2002 quarter. Much of last year's loss came from a $542 million charge for store closures.
Sales for the quarter fell 13.9% to $6.18 billion from $7.18 billion. The results were hurt in part by the 320-plus stores that the company shuttered during its final round of closings announced in mid-January. Comparable-store sales for stores open at least a year, however, declined 3.2%.
Gross margin, as a percentage of sales, rose to 23% for the quarter, up from 10.4% a year ago. Gross margin dollars nearly doubled, rising 90.5% to $1.42 billion in the quarter, thanks to 2003 liquidation sales, a decrease in sales of food and consumables and a decrease in promotional markdowns.
Julian Day, president and chief executive officer, said in a statement, "This management team is very focused on building the financial foundation of the new company. We are strengthening our business by driving profitable sales, identifying opportunities to further improve efficiency and reduce costs, and enhancing the productivity of our assets."
Kmart said it cut selling, general and administrative expenses, including advertising costs, by $249 million to $1.42 billion, or 23% of sales, from $1.67 billion, or 23.3% of sales.
