Kmart lost $176 million in Sept.

Same-store sales off 6.9%

goal of leaving Chapter 11 by July is reaffirmed

October 22, 2002|By BLOOMBERG NEWS

TROY, Mich. - Kmart Corp., the largest U.S. retailer to file for bankruptcy, had a net loss of $176 million last month as sales at stores open at least a year declined for a 12th consecutive month.

The discount retailer said yesterday that it had revenue of $1.97 billion last month as same-store sales dropped 6.9 percent, according to a filing with the Securities and Exchange Commission. Kmart has lost about $2.7 billion since filing for bankruptcy protection in January.

The company said it will meet a deadline of February for filing a reorganization plan and reaffirmed that it expects to emerge from Chapter 11 by July.

Kmart said last month's sales decline was less than the 11 percent average drop in the months since the filing and that sales have improved this month.

Kmart is the No. 3 discount retailer in the United States, behind Wal-Mart and Target.

"When you look at the numbers incrementally, they've gotten better," said Brandon Stranzl, an analyst at Third Avenue Funds and a member of the financial creditors' committee. "Right now, the most important thing is to get it out of bankruptcy."

Analyst Eric Beder with Ladenburg, Thalmann & Co. Inc., disagreed. "There's been virtually no momentum," Beder said. "My feeling is Kmart has given no indication that there's a turnaround going on at all."

Kmart, based in Troy, Mich., said it had $336 million in cash and equivalents as of Sept. 25. The discounter has used $35 million of its bankruptcy loan to stock up for the holiday season, its most important sales period, Chief Financial Officer Al Koch said in a conference call with reporters.

The retailer expects to file the reorganization plan by Feb. 24. The U.S. Bankruptcy Court has given Kmart exclusive rights for offering a plan, barring creditors or shareholders from proposing plans before March.

Kmart repeated that its July goal is "aggressive." The company previously said the reorganization might extend through early 2004.

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