Troy, MI, Aug 28--Kmart Holding posted a much narrower loss in its fiscal second quarter amid lower expenses despite a 21% drop in sales.
Kmart Holding, an entity formed under the so-called Fresh Start accounting measures upon the emergence of Kmart Corp. from bankruptcy, late Thursday reported a net loss of $5 million, or six cents a share, for the quarter ended July 30. A year earlier, the company posted a net loss of $293 million, or 58 cents a share.
Excluding discontinued operations, the discount retailer lost $8 million, or nine cents a share, in the latest quarter.
Under Fresh Start reporting, a new entity is deemed created for financial reporting purposes, and operations of the predecessor company and the successor company aren't compatible. As a result of the accounting methods, Kmart said that its latest results and year-earlier results are "not comparable."
Sales fell to $5.65 billion from $7.18 billion a year earlier. Kmart's same store sales, or sales at stores open at least a year, slid 5.4%.
President and Chief Executive Julian C. Day said in a prepared statement that the company is focused on profitable sales, reducing selling, general and administrative expenses, and "enhancing the productivity of our assets."
SG&A costs fell 20% to $1.23 billion for the quarter.
The company closed 599 stores during fiscal 2002 and the first quarter of fiscal 2003, which Kmart said contributed to the lower SG&A expenses.
Kmart's board, meanwhile, approved the repurchase of up to $10 million of the company's common shares outstanding in order to provide restricted stock grants to certain employees.
Kmart said it is exploring options to cover the cost of its exit financing facility, citing about $1.5 billion in borrowing availability on its $2 billion credit facility.
The company filed for bankruptcy protection in January 2002 and completed a Chapter 11 reorganization in May, receiving court approval for $2 billion in new financing.
