Kmart Recovery Stalls

Kmart Corp. (Troy, Mich.) announced that it had lost $1.45 billion in its fiscal first quarter of 2002, the first three full months following the retailer's Chapter 11 bankruptcy filing on Jan. 22, 2002. During the same quarter a year ago, Kmart's net losses were $233 million.

Same-store sales declined 8.8 percent from a year ago. Excluding the 283 stores that have been closed this year, the same-store sales decline was 11.7 percent.

“Kmart's significant losses and sales decline in the first quarter reflect the many challenges the company faced in the period following our voluntary Chapter 11 filing,” said chairman and ceo James Adamson. “These challenges included reduced inventory levels as vendors withheld shipments in the early days of the reorganization and reduced store traffic arising from the bankruptcy filing.”

Adamson acknowledged that “there is still much hard work ahead [but] we are pleased with the early progress we are making in addressing in-stock levels, customer service and store traffic. Nearly all of our vendors have resumed shipments to us and in-stock levels in the stores have improved. Likewise, our focus on improving the physical condition of our stores and enhancing customer service helped produce a successful Customer Appreciation sale in early June.”

As of May 1, 2002, Kmart had approximately $1.1 billion in available cash and approximately $1.6 billion available under its debtor-in-possession credit facility.