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TROY, Mich. - Kmart Holding Corp. today posted its second consecutive quarterly profit. The Troy, Michigan-based discount retailer, which emerged from Chapter 11 bankruptcy protection last May, reported net income of $93 million, or 94 cents per share, for the fiscal first quarter ended April 28. For last year's first quarter, Kmart reported a loss of $862 million while it was still in bankruptcy.
Operating income for the first quarter was $165 million, or 3.6 percent of sales, as compared to a loss of $39 million, or negative 0.6 percent of sales, for the same period in 2003. The improvement was primarily due to the decrease in selling, general and administrative (SG&A) expenses and the improvement in gross margin rate, partially offset by an overall decline in gross margin dollars due to a reduced store base.
Operating income was also impacted by net gains on sales of assets of $32 million in the current quarter, and restructuring, impairment and other charges of $37 million in the same period in 2003.
Same-store sales and total sales decreased 12.9 percent and 25.3 percent, respectively, for the 13 weeks ended April 28, 2004, compared to the 13 weeks ended April 30, 2003. The decrease in same-store sales is attributed primarily to several company-wide promotional events that occurred in the first quarter of fiscal 2003, along with a reduction in advertising.
"We are delighted with the progress we've made in our business," said Julian C. Day, president and c.e.o. of Kmart. "For the fourth consecutive fiscal quarter, we have reported improved year-over-year profitability and liquidity through our consistent approach of focusing on profitable sales with an improved gross margin rate, reducing operating costs through operational execution, and working to improve the productivity of our assets. These initiatives, together with a renewed focus on communicating the benefits of the Kmart shopping experience to our customers, will continue to characterize our approach going forward."
Day also cited the company's focus on inventory management, saying its inventories were down more than 23 percent from a year earlier.
Kmart also said gross margin rose to 24.6 percent of sales from 23.0 percent a year earlier because of fewer clearance sales.
As of April 28, 2004, Kmart had approximately $2.2 billion in cash and cash equivalents.