CHICAGO – Bankrupt discount chain Kmart Corp. (KM) Thursday reported a loss of $1.02 billion in April as the number of customers shopping in its stores dropped in the month.
Sales in the five weeks ended May 1 were $3.2 billion. Sales at stores open at least a year, or same-store sales, were $2.08 billion, down 16.4 percent from a year ago in April, according to a filing with the U.S. Securities and Exchange Commission.
Same-store results, a key measure of retail performance, exclude sales from the 283 stores that Kmart is in the process of closing. Before the bankruptcy on January 22, Kmart operated 2,114 stores.
By comparison, same-store sales at discount rival Wal-Mart Stores Inc. rose 3.3 percent. A year-ago in April Kmart had sales of $2.76 billion, and its same-store sales rose 1.1 percent.
Seventy-five percent of the drop in April same-store sales could be attributed to a decline in store traffic, while 25 percent was due to shoppers spending less, Kmart Chief Financial Officer Al Koch said on a conference call with reporters.
Sales in April were also hurt by unseasonably cool weather as well as the Easter shift. Easter was in March this year, so most holiday-related sales were rung up in March.
To entice shoppers back into stores, the retailer is planning a "Welcome Back" sale in early June. Former Kmart customers will receive letters that will include some type of promotion, Koch said.
The Troy, Michigan-based retailer said it expects to generate positive same-store sales by the end of 2002.
One analyst characterized the loss in customer traffic as alarming.
"I'm guessing there are some people who think that going bankrupt is the same as going out of business," Eric Beder, retail analyst at Ladenburg, Thalmann & Co., said. "Shoppers are voting with their feet, and I'm not sure a coupon is going to bring them back."
Kmart vendors are still being supportive during the bankruptcy proceeding, and the amount of merchandise on shelves, or in-stock levels, was running at about 94 percent, Koch told reporters.
Koch said Kmart had about $1.2 billion in cash on hand and had not drawn on its $2.1 billion debtor-in-possession financing. Rather, Kmart will tap that line of credit to pay for merchandise for the 2002 holiday season.
Kmart has set July 2003 as it goal to emerge from bankruptcy, which Koch characterized as "doable, but aggressive." He said the corporation would need a couple of months to better determine if that was a realistic target.
The retailer also said it was amending operating results for the period from Jan. 22 to Feb. 27 and for the period from Feb. 28 to March 7.
The numbers were restated to account for the way that Kmart records certain payments from vendors. The company also reported balance sheets for those periods.
Shares of Kmart ended up 2 cents, or 1.75 percent, at $1.16 on the New York Stock Exchange. Turnover was more than 2.9 million shares. REUTERS