NEW YORK — The bad months keep piling up for bankrupt Kmart Corp.
In a filing with the Securities and Exchange Commission Monday, the distressed retailer said it posted a second-quarter loss of $377 million, or 75 cents a share, for the period ended July 31, compared with a loss of $377 million, or 77 cents, for the same quarter a year ago. Excluding non-comparable items, discontinued operations and reorganization costs, the loss was $333 million, or 66 cents, in the quarter, versus $304 million, or 62 cents, in the same quarter last year.
This story first appeared in the September 17, 2002 issue of WWD. Subscribe Today.
Sales for the quarter fell 15.7 percent to $7.52 billion from $8.92 billion last year. The retailer, which closed 283 under-performing stores since filing a voluntary Chapter 11 petition in January, said same-store sales fell 11 percent in the quarter.
In addition, Kmart filed with the SEC its August monthly operating report showing it lost $126 million on sales of $2.09 billion for the period from Aug. 1 through Aug. 28. The loss includes $15 million in reorganization costs. Comparable-store sales fell 11.9 percent in the month, Kmart said.
The cash flow picture for the month of August was just as bleak. Cash inflows totalled $2.26 billion, which included $2.12 billion from store receipts. Cash outflows, which include accounts payable, payroll and rent, totalled $2.43 billion, which left Kmart with a negative cash flow of $171 million.
Kmart’s availability under its $2 billion debtor-in-possession financing facility — after a 5 percent holdback of $100 million for professional fees and $446 million for letters of credit issued — was $1.45 billion as of Aug. 28. The firm said in a statement as of that date, its balance sheet cash position was $830 million, of which $500 million represents cash at stores and outstanding checks.
A monthly operating report for July was also filed by the company with the SEC, which showed a $144 million loss on sales of $2.6 billion. Cash inflows for the month were $2.8 billion, including store receipts of $2.63 billion, while cash outflows were $3.39 billion, leaving the retailer with a negative cash flow of $582 million.
James B. Adamson, chairman and chief executive officer, said in a statement that Kmart’s focus during the second quarter was on stabilizing the business. “However, despite the success of initiatives such as our Customer Appreciation promotion in early June, the company’s sales have improved slower than we would have liked.”
Kmart said operating results for the second quarter of 2002 included charges totaling $90 million for accounting adjustments relating primarily to prior periods. The adjustments included a charge of $57 million to write-off certain costs, referred to as inventory “loads,” that had been capitalized into inventory. According to Kmart, “These costs, which had been recorded for internal reporting purposes, should have been eliminated in the company’s external financial reports.”
For the six months ended July 31, Kmart reported a $1.83 billion loss, or $3.63 a share, versus a $610 million loss, or $1.25 a share, in the year-ago period. Sales dropped 12.1 percent to $15.16 billion from $17.25 billion, while comps fell 11.4 percent.
Separately, Kohl’s Corp. is seeking Chicago bankruptcy court approval to take over six former Kmart sites while Burlington Coat Factory is seeking the OK to take over seven sites. A hearing has been set for Sept. 25.