DETROIT – Kmart Holding Corp. (KMRT) on Wednesday said it posted a $309 million profit for the fourth quarter, a 14 percent increase over the previous year.
The retailer, which in the coming weeks is expected to close its acquisition of Sears, Roebuck and Co. (S), saw its same-store sales fall, but the rate of decline was less than the two previous quarters.
Kmart earned $3.09 per share in the quarter ended Jan. 26, compared with $2.78 per share in the fourth quarter of fiscal 2003.
Troy-based Kmart said its adjusted net income, excluding gains on sales of assets and bankruptcy-related recoveries, increased 20 percent over the prior year to $259 million, or $2.59 per share.
Total revenue fell 7 percent to $5.9 billion. Same-store sales, which compare sales in stores open at least a year and are considered a good measure of a retailer's health, fell 4.5 percent. In the two previous quarters, the decline was 12.8 percent and 14.9 percent, Kmart said.
Kmart has earned praise for its quick financial turnaround after emerging from bankruptcy in May 2003. But the drop in same-store sales shows the difficulty Kmart has had winning back and keeping customers.
"While we are pleased with our performance, our return to solid, profitable operations is only the first stage in our effort to revitalize this organization," chief executive Aylwin Lewis said in a statement. "We look forward to what still needs to be accomplished and plan to continue our momentum by further improving our operations and the customer shopping experience in 2005."
Income for the full year was $1.1 billion, or $11 per share. That included $579 million from asset sales and $37 million in bankruptcy-related recoveries, as well as a $14 million after-tax charge related to the company's decision to reduce and terminate a credit facility.
There were no comparable full year 2003 earnings because the company was in bankruptcy for part of that year.
Shareholders of Kmart and Sears are to vote on the proposed merger, announced in November, at special meetings March 24 at Sears headquarters in the Chicago suburb of Hoffman Estates, Ill. The headquarters of the new company also will be in Hoffman Estates.
Kmart's $11 billion acquisition of the department store chain will create the nation's third-largest retailer.
Kmart Holding shares rose 5 cents to $109.29 Wednesday on the Nasdaq Stock Market (search).
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