Shares of Kmart Corp. Monday ended at the lowest level in more than 34 years after another round of cuts to the discount chain's debt ratings provoked additional worries about the company's finances.

After trading as low as $2.57, or off 22 percent, the stock recovered to end down 46 cents, or 13.94 percent, at $2.84 on the New York Stock Exchange. More than 28 million shares changed hands, making it the most actively traded stock on the exchange.

Kmart's stock, which is down 40 percent since Jan. 2, has been hammered in recent weeks by debt downgrades, the suggestion of bankruptcy by Wall Street analysts and an earnings warning.

"Anywhere there is a question about a company's finances, investors are pushing down the stocks," said Ulysses Yannas, retail analyst at Buckman, Buckman & Reid.

Standard & Poor's on Monday cut Troy, Michigan-based Kmart's senior credit and debt ratings, marking the company's third downgrade in recent days. The credit rating agency cited worries that the retailer's financial flexibility is eroding and its suppliers are losing confidence.

After the close on Friday, Moody's Investors Service lowered Kmart's debt rating after the retailer's unsecured debt was downgraded to junk last month. Moody's, which also warned that another downgrade is possible, cited doubts about the company's turnaround strategy and its long-term prospects.

The Moody's downgrade affects about $4.7 billion of debt and could raise borrowing costs for the nation's second-largest discount chain. Wal-Mart Stores Inc. is the largest discounter.

VENDORS, INVESTORS NEED REASSURANCES

"All of this appears to be part of the nervous picture," said Bernie Sosnick, retail analyst with Fahnestock & Co.

"I think they need to say something that is reassuring to their suppliers. They need to assure that the company has sufficient funds to buy goods for the spring season," the analyst said.

Bankrupt underwear maker Fruit of the Loom, which counts Kmart as its second-largest customer, said the discount chain has been paying its bills on time.

"We're watching their account like anyone would be," said Brian Hanigan, Fruit of the Loom's treasurer.

Kmart said last week that it was in talks with its lenders about existing and supplemental financing and that it was reviewing its business plan.

Food distribution company Fleming Cos. Inc. , one of Kmart's largest suppliers, issued a statement on Monday that said the discount chain was current in its payments. Fleming also said its fourth-quarter earnings will be in line with estimates.

Still, Moody's said on Monday it may cut Fleming's debt ratings because Kmart is the grocery supplier's most important customer.

"If the vendors didn't put them (Kmart) under in 1995, I don't think the vendors will put them under today," Buckman's Yannas said. "They are too big."

Kmart's balance sheet was in worse shape in 1995 than in 2001 and its stores were also in disrepair, Yannas said.

Also on Monday, Kmart said its sales for the week ended Jan. 9 were below target, but it did not release specific figures. It said its target is for January same-store sales to be flat to 2 percent higher.