Kmart Corp. (KM) Wednesday reported a loss of $2.42 billion in fiscal 2001 and said it would restate the first three quarters of that year after closing the books on an accounting investigation.

Kmart filed for bankruptcy on Jan. 22, citing weak holiday sales and stiff competition from rivals like Wal-Mart Stores Inc. .

Until now, the Troy, Michigan-based retailer has not reported results for 2001, so the financial figures shed additional light on what went so wrong at the discount retailer.

"These results reconfirm the significant difficulties Kmart experienced last year, including unsuccessful sales and marketing initiatives, an erosion in supplier confidence, and below-plan sales and earnings performance in the fourth quarter -- all of which were factors in the decision to file for Chapter 11 bankruptcy protection," James Adamson, Kmart's chairman and chief executive officer, said in a statement.

In the fiscal year ended January 30, 2002, Kmart reported a loss of $2.42 billion, or $4.89 per share, versus a loss of $244 million, or 48 cents per share for a year earlier.

Excluding one-time items, income from reorganization items and results of discontinued operations, Kmart's loss was $987 million, or $2.00 per share, in the 2001 fiscal year versus net income of $219 million, or 47 cents a year ago.

The retailer said sales in the year, ended Jan. 30, fell 2.4 percent from a year ago to $36.15 billion, while sales at its stores open at least a year were essentially flat for the year.

Kmart launched a probe of the way the company accounts for vendor credits in January and said it may need to restate results. The retailer said this month it was investigating the way the company was run under former Chief Executive Officer Chuck Conaway.

Kmart said it would announce its new business strategy later this year and still had $1.1 billion left on its $1.6 billion debtor-in-possesion financing as of May 1.