NEW YORK -- Hit with a pretax charge of $168 million from the sale of stores to Wal-Mart, Woolworth Corp. said it expects to report an after-tax loss of $46 million in the fourth quarter ended Jan. 29.

In the year-ago quarter, Woolworth had a profit of $165 million, or $1.26 a share.

News of the projection sent Woolworth stock, traded on the New York Stock Exchange, down 3/8 to close at 22 1/2 Friday.

When the deal to sell its Woolco stores in Canada was first announced in January, Woolworth estimated the loss for the quarter would be $45 million. But Woolworth revised the projection downward by $1 million after suffering from markdowns, the disposal of stores that are not being sold to Wal-Mart and delays in closing the deal with Wal-Mart. Woolworth projects a $250 million cash flow from the transaction. It said normal fourth-quarter operations were also hurt by "disappointing sales and heavy promotions."Sales are projected to fall 10.2 percent, to $2.8 billion from $3.1 billion.

The quarter also includes a pretax credit of $145 million for a reversal of a store repositioning charge taken in the third quarter of 1993.

For the full year, the company expects to post a loss of $495 million, against earnings of $280 million a year ago. Woolworth is projecting sales of $9.62 billion, down 3.4 percent from the $9.96 billion of a year ago. Following this news, Moody's Investor Service said Friday it has downgraded the senior long-term rating of Woolworth to BAA1 from A3.

Woolworth expects to report official earnings results in early March.

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