TROY, Mich. – Discount retailer Kmart Corp. (KM) Friday posted a $1.45 billion quarterly net loss as it took a massive charge to clear inventory out of stores it shuttered after it filed for bankruptcy.
The company, which faces stiff competition from Wal-Mart (WMT) and Target (TGT), said its net loss widened to $2.88 per share, for the first quarter ended May 1 from $233 million, or 48 cents a share, a year earlier.
Kmart, which has cut 22,000 jobs following its bankruptcy filing, took charges of $758 million to write down inventory and $265 million for reorganization items, mainly lease terminations for closing 283 stores, in the latest quarter.
Excluding special items, Kmart said the loss nearly doubled to $408 million, or 81 cents per share, from $218 million, or 45 cents a share.
Sales for the quarter fell 8.4 percent to $7.64 billion from $8.34 billion a year earlier. Sales at stores open at least a year, a key measure of retail performance, slid 8.8 percent. Excluding the stores Kmart shuttered, same-store sales dropped 11.7 percent.
James Adamson, who in March took over as chairman and chief executive from Charles Conaway, said the loss reflects lower inventory levels as vendors withheld shipments in the early days of its reorganization and store traffic dwindled after the bankruptcy filing.
"While there is still much hard work ahead," he said in a statement, "we are pleased with the early progress we are making in addressing in-stock levels, customer service and store traffic."
As of May 1, Kmart said it had about $1.1 billion in available cash and about $1.6 billion available under its debtor-in-possession credit facility.
Kmart sought bankruptcy protection Jan. 22 after weak holiday sales created a cash crunch at the century-old retailer. Solid holiday sales are seen as critical to its emergence from bankruptcy, which it hopes to achieve by July 2003.
Last month, the retailer said its losses ballooned to $2.42 billion for the year ended on Jan. 31. It also said it would restate results for the first three quarters of that year after an accounting investigation determined it should have treated vendor credits differently.
Kmart also said late last month it will not seek court approval of severance pay or other compensation to former executives until it finishes an investigation of company management leading up to the bankruptcy filing. Few executives who ran Kmart before the Chapter 11 petition remain there.
The company launched an internal investigation in January after receiving a letter, purportedly from employees, that questioned accounting practices. It notified federal authorities and is cooperating with investigations by the U.S. Attorney's office in Michigan and the U.S. Securities and Exchange Commission.