KMART Cutting expenses helps retailer post smaller loss

DETROIT (AP) -- The holding company of Kmart Corp. showed a smaller loss in its first earnings report since the company left bankruptcy, although sales deteriorated.
The discount retailer reported Thursday that its second-quarter loss narrowed to $5 million, or 6 cents a share, from $293 million, or 58 cents a share, a year ago.
"We are pleased with the progress we continue to make in our business," Julian Day, Kmart president and chief executive, said in a prepared statement. The Troy-based company emerged from bankruptcy protection in May.
Excluding interest, reorganization costs, income taxes and discontinued operations, Kmart said it would have posted an $8 million profit, compared with a loss of $264 million in the second quarter of last year.
Sales fell to $5.65 billion, down 21.3 percent from $7.18 billion a year earlier.
Sales at stores open at least a year declined 5.4 percent from the same period a year ago. Called same-store sales, they are considered the best measure of a retailer's health.
Despite the declining sales, Kmart was able to stem its losses by slashing expenses by 20 percent, or $307 million, from the year-ago quarter.
Kmart closed nearly 600 stores and shed 57,000 employees as part of its 15-month reorganization after filing for bankruptcy protection in January 2002. It has said it plans to return to profitability in 2004.
Less shoplifting and an improvement in its sales mix helped boost profit margins, the company said. Gross margin, as a percentage of sales, rose to 21.8 percent for the quarter, up from 17.7 percent a year-earlier.
Also Thursday, Kmart's board of directors approved the repurchase of up to $10 million of the company's outstanding stock to provide restricted stock grants to certain employees.