Bankrupt Kmart Corp on Monday last reported a second quarter net loss of $377 million – the same as its year-ago quarter. The company cited weak sales and costs from its reorganisation as the cause. In a further blow the discount retailer revealed accounting discrepancies that boosted its loss in 2001 and understated the amount the year before.
Excluding one-time charges, closed stores and reorganization items, net second quarter loss was $333 million, compared with a net loss of $304 million in the year-ago quarter. Net sales for the period were $7.52 billion, a decrease of 15.7 per cent from $8.92 billion in 2001.
Same-store sales fell 11 per cent. Kmart said its stores lost $137 million in June, $144 million in July and $126 million in August.
“Despite the success of initiatives such as our customer appreciation promotion in early June, the company’s sales have improved slower than we would have liked,” said James Adamson, chairman and chief executive of Kmart.
Kmart has already said it is introducing several initiatives to increase store traffic and sales, such as developing brands designed to appeal exclusively to Hispanic customers.
The accounting discrepancies disclosed in Kmart’s latest 10-Q report are now being investigated by the Securities and Exchange Commission. They overstated fiscal 2001 net loss by $78 million, and understated the 2000 loss by $38 million.
Kmart filed for Chapter 11 protection from creditors in January, citing weak holiday sales and stiff competition from rivals like discount giant Wal-Mart Stores Inc. The retailer has not posted a profit since the fiscal fourth quarter of 2000.