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Kmart's Sales for September Decline 6.9%

October 22, 2002|From Reuters

Discount retailer Kmart Corp. on Monday posted a smaller drop in sales at stores open at least one year as a new marketing program began to pay off, and stood by its plan to emerge from bankruptcy protection by July 2003.

In a filing with the U.S. Securities and Exchange Commission, Kmart said same-store sales fell 6.9% for the five-week period ended Oct. 2.

Since the company filed for Chapter 11 in January, citing weak holiday sales and stiff competition, monthly same-store sales declines have averaged 11%. August same-store sales dropped 11.9%, and July's were down 13.8%.

Total September sales for the four-week month ended Sept. 25 reached $1.967 billion, while the loss for the month stood at $176 million. Retailers report comparable-store sales on a different calendar than total monthly sales.

September was a tough month for most U.S. retailers as warm weather crimped demand for winter clothing and a weak economy kept consumers frugal.

Kmart, caught between Wal-Mart Stores Inc.'s low-price dominance and Target Corp.'s strength in customer service, has pinned its hopes on find- ing a niche in the Hispanic and African American communities.

Richard Hastings, chief economist and retail sector analyst with Cyber Business Credit, said despite the improving trend, Kmart and other discounters may continue to struggle because lower-income consumers have been hit especially hard by a weakening economy and slow job market.

Julian Day, president and chief operating officer, credited a new marketing program for at least some of the improvement.

Kmart launched a campaign it calls "Have to Have It" in Chicago and Detroit, focusing on promoting certain items and making sure they were in stock -- something that had been a problem for Kmart leading up to the bankruptcy filing.

September same-store sales in the two cities were flat or positive against last year, Day said.

Kmart shares closed up 3 cents at 53 cents on the New York Stock Exchange.

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