NEW YORK — Kmart Corp.’s first-quarter loss provided buckets of red ink and a stark picture of the road ahead.

This story first appeared in the June 17, 2002 issue of WWD. Subscribe Today.

Losses mounted to $1.45 billion, or $2.88 a share, compared with year-ago losses of $233 million, or 48 cents.

Included in the quarter were $758 million in markdowns to liquidate inventory and $18 million in accelerated depreciation.

Exclusive of noncomparable and reorganization items in both quarters, the loss was $408 million, or 81 cents, compared with a year-ago loss of $218 million, or 45 cents.

Sales for the 13 weeks ended May 1 retreated 8.4 percent to $7.64 billion from $8.34 billion in the first quarter last year. On a comparable-store basis, sales dropped 8.8 percent. Without the 283 doors closed this year after Kmart’s Jan. 22 bankruptcy filing, comps were down 11.7 percent. The Troy, Mich.-based retailer continues to operate more than 1,800 locations.

Operating reports for each of the three months were previously filed with the Securities and Exchange Commission and reported.

“Kmart’s significant losses and sales decline in the first quarter reflect the many challenges the company faced in the period following our voluntary Chapter 11 filing,” said chairman and chief executive officer James Adamson in a statement.

“These challenges included reduced inventory levels, as vendors withheld shipments in the early days of the reorganization and reduced store traffic arising from the bankruptcy filing,” he said.

Adamson took the helm of the firm from Charles Conaway in March. Last month, the firm eliminated 12 senior-level positions affecting the logistics, real estate and merchandising areas. Earlier this month, Kmart’s top merchant, Cecil Kearse, left and was replaced on an interim basis by William Underwood, who took control of the firm’s merchandising function, except for food and consumables. Underwood, a Kmart veteran, returned to the firm as executive vice president of sourcing and global operations.

Who will ultimately take over Kmart’s merchandising remains up in the air. The short list may include Roger Goddu, former ceo of defunct Montgomery Ward, as reported. Filling out its executive ranks, though, remains only one of many issues the firm must resolve to stage a comeback.

“While there is still much hard work ahead, we are pleased with the early progress we are making in addressing in-stock levels, customer service and store traffic,” said Adamson.

“Nearly all of our vendors have resumed shipments to us and in-stock levels in the stores have improved,” he said. Kmart also has made strides to better the physical condition of its stores and improve customer service.”

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