NEW YORK — What’s a half billion dollars between friends?
This story first appeared in the June 13, 2002 issue of WWD. Subscribe Today.
Kmart Corp.’s expected financial restatements, which reflect an accounting change on vendor allowances and rebates, upped its losses for the first three quarters of 2001 by $501 million, or $1.03 a share.
The losses were revealed in three separate 10Q/A filings with the Securities and Exchange Commission Wednesday.
Kmart, which filed for bankruptcy protection on Jan. 22 and installed James Adamson as chief executive in March, posted a loss for its full fiscal year of $2.42 billion, or $4.89 a share.
This would leave fourth-quarter losses, including charges, at $1.58 billion, or $3.17 a share.
Under Adamson, Kmart’s new management team reviewed the accounting for allowances and “concluded that it would be preferable to change the company’s accounting method for interim recognition of cost recoveries from allowances.”
Vendor allowances and rebates are periodic payments received by the retailer from vendors in the form of volume or other purchase discounts.
While the change was adopted in the fourth quarter of 2001, generally accepted accounting principles require the restatement of the first three quarters of fiscal 2001 to reflect the change.
Losses for the first quarter ended May 2 grew to $233 million, or 48 cents a diluted share, from the originally reported deficit of $25 million, or 5 cents.
The second-quarter’s loss was dragged down to $377 million, or 77 cents a diluted share, from $95 million, or 19 cents.
Third-quarter losses saw the smallest change, dropping to $235 million, or 47 cents a diluted share, from the previously reported $224 million, or 45 cents.
Sales for the first quarter were $8.34 billion, for the second quarter $8.92 billion and for the third $8.02 billion.
As previously reported, Kmart’s sales last year dropped 2.4 percent to $36.15 billion from $37.03 billion, ranking them fourth in U.S. revenues among non-food retailers behind Wal-Mart, Sears and Target, but ahead of J.C. Penney. Same-store sales were essentially flat, dipping 0.1 percent.