KMART SWINGS A 5.4% RISE IN NOV. SAME-STORE SALES
NEW YORK — Kmart Corp. has been having trouble all year and things could get worse, but its U.S. discount units managed a 5.4 percent same-store sales gain in November, getting a big lift from inventory clearances. It was the third consecutive month that Kmart’s discount stores achieved a larger same-store sales increase than Wal-Mart’s general merchandise units, which had a 4.9 percent gain. Target was up 5.6 percent.
“All things being equal, it was a pretty decent month for Kmart,” said Jeffrey Edelman, an analyst at CJ Lawrence Deutsche Bank. He noted Kmart continued aggressively to move discontinued inventory, but also pulled in a fair amount of regular-price business.
Last weekend, with holiday shopping just getting started, Kmart’s same-store sales were up in the “low to mid-single digit range,” a spokeswoman said.
Kmart has been trying to clear discontinued merchandise from its shelves and warehouses for the past several months. It has taken a hit on the gross margin line. The 2,172-unit chain reported a loss of $118 million from continuing operations in the third quarter. According to Wall Street analysts, Kmart cleared about $250 million worth of merchandise in the third quarter and still has about $680 million in discontinued goods to move over the next five quarters.
Meanwhile, Kmart has been dogged by rumors of bankruptcy for the past two months and repeatedly has denied them. Responding to talk this week that the company was considering a prepackaged Chapter 11 petition, the spokeswoman said, “It’s just not true.” The company has “substantial” bank lines available and the support of its bankers, factors and vendors, she added.
“We have every expectation of continuing to operate our company without resorting to the courts for assistance,” the spokeswoman said. “The Chapter 11 rumors are just that — rumors.”
She confirmed a report that Frederic M. Comins Jr. resigned as senior vice president of executive and organization resources. Comins joined Kmart in 1990 as a director of executive resources. He left of his own accord, the spokeswoman said.