New Start, Old Troubles

Kmart (Troy, Mich.), which emerged from Chapter 11 bankruptcy protection as scheduled on Tuesday, also reported a $483 million loss for March, its third straight month of losses.

The discount retailer said March sales at stores open at least a year dropped 7.4 percent, while total sales came in at $1.9 billion.

Since filing for bankruptcy in January 2002, Kmart has closed about 600 of its 2100 stores. It has called 2003 a “transition” year and does not expect to return to profitability until next year.

Nonetheless, president and ceo Julian Day characterizes Kmart's emergence from bankruptcy as “a momentous day” for the retailer.

“We have strengthened our balance sheet and significantly reduced liabilities by $6 billion,” says Day. “We have secured $2 billion in exit financing, which will provide continued assurance to our vendors and landlords about our strong liquidity position. We have closed stores and renegotiated onerous lease agreements. Additionally, we have developed a more disciplined, efficient organization and lowered our overall operating costs.”