ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, May 22, 1996 TAG: 9605220037
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
DATELINE: DETROIT
SOURCE: Associated Press
While Kmart Corp.'s chairman tried to assure shareholders Tuesday that the discounter's ``renaissance'' was well under way, the No. 3 retailer reported a $99million quarterly loss.
The loss for the quarter ending May1 amounted to 21 cents a share, compared with a loss of $28million, or 6 cents a share, in the first quarter of 1995.
Kmart's 13th consecutive quarter of disappointing results was affected in large part by a charge of $61million, or 13 cents a share, related to the sale of 4 million shares in the Thrifty PayLess drugstore chain. Without the charge, Kmart would have lost $38million, or 8 cents a share.
The company had valued the stock at just over $19 a share, but it sold in an initial public offering in March at $14. Kmart also devalued the 11.2 million shares of Thrifty PayLess it still holds. The combined actions led to the $61 million charge, said Bob Burton, Kmart's director of investor relations.
Sales for the quarter were up nearly 2 percent at $7.58billion, compared with $7.44billion last year. Kmart said sales were hurt by having fewer stores and by cold weather that extended into April, depressing sales of high-profit spring garden supplies.
Analysts said, however, that the results were slightly better than Wall Street expected. The company's stock was up 121/2 cents at $10.25 a share in trading on the New York Stock Exchange.
Chairman Floyd Hall said Kmart cut expenses, largely through the closing of unproductive stores and the sale of its auto service business.
Analyst Ron Petrie of Roney & Co. in Detroit said he expects Kmart to make a comeback this year.
``They have obviously been focusing on improvement as much as anybody in the industry in the last year,'' he said. ``I think they're going to surprise people this year.''
That theme was echoed at Kmart's annual meeting in Detroit, where Hall said the company's new management was dedicated to ``write one of the great retail stories of the '90s.''
``We are pleased with the progress and believe that the worst of times are behind us,'' he said.
Hall told a news conference that he expects Kmart to record a profit for the full year, and show significant improvement by the third quarter.
Kmart has been struggling for years against more efficient discounters, such as Wal-Mart Stores Inc. and the Target discount chain of Dayton Hudson Corp.
Troy, Mich.-based Kmart has 2,159 discount stores and 167 Builders Square home-improvement outlets in the United States, as well as 134 discount stores overseas.
LENGTH: Medium: 58 lines ILLUSTRATION: PHOTO: Floyd Hall\Says the worst is overby CNB