Bankrupt retailer Kmart Corp. (KM) said on Wednesday it may need to restate past results after a probe of its accounting practices, leading to fears of further big losses.

Troy, Michigan-based Kmart said its new management needed more time to prepare the company's annual financial report in light of accounting reviews by the company and the U.S. Securities and Exchange Commission. The reviews relate to how the company accounts for rebates, vendor allowances and general liability reserves.

"I think we're going to see some really big losses in a retrogressive manner," said Richard Hastings, an analyst at Cyber Credit LLC in New York. "I think it's going to be pretty unpleasant." 

The discount chain has not yet reported fourth-quarter results, but it said on Wednesday its loss in the fiscal year ended Jan. 31, 2002, would be "significantly higher" than the $244 million loss a year earlier. 

Shares of Kmart, the No. 2 discount chain behind Wal-Mart Stores Inc. , fell 9 cents, or 6.7 percent, to $1.25 on volume of 4.5 million shares on the New York Stock Exchange on Wednesday. 

Since filing for voluntary Chapter 11 bankruptcy protection in January, Kmart shares have dropped about 31 percent. The stock had traded as high as $13.50 last August. 

Kmart has announced plans to close 283 of its 2,114 stores and cut 22,000 jobs from its 250,000-person work force. Since the bankruptcy, the retailer racked up losses in February and March and saw its same-store sales decline. Same-store sales, a key measure of retail performance, exclude results from stores open for less than a year. 

Accounting issues relating to vendor discounts and payments would be big ones for Kmart or any retailer of its size, one accounting expert said. 

"I would think for a retailer, these items would be quite significant," said Joseph Carcello, professor of accounting at the University of Tennessee in Knoxville. "But I don't know the difference between what Kmart has recorded and what they are concluding now they should have recorded." 

Vendor allowances and rebates are volume discounts or other purchase discounts received by Kmart from manufacturers, while general liability reserves are booked to cover litigation that arises from store operations, Kmart spokesman Jack Ferry said. 

For example, manufacturers might discount goods sold to Kmart if the retailer offered to place them prominently on shelves. Vendors also bankroll certain marketing and promotional costs, analysts said. 

"This is typical with a company that has a lot of problems," Hastings said. "There is more deal making (between retailers and vendors) than less." 

Hastings said the deals can lead to problems with revenue recognition and expenses related to revenues. 

Kmart launched its accounting review in January after its board of directors received an anonymous letter purporting to be from Kmart employees. 

The retailer said it expects to complete its review shortly. 

"The extension is not a big deal," said Eric Beder, a retail analyst at Ladenburg Thalmann. "The fact that this whole (accounting) investigation is proceeding, I would have to argue, is worrisome. Looks like the apple was a little rotten before the bankruptcy." 

Kmart, the largest U.S. retailer to seek protection from creditors, had said it would file its 10-K report with the U.S. SEC by April 30, but now is seeking to file the document on May 15.