Kmart clears the decks
By Don Hogsett -- Home Textiles Today, 11/13/2000
TROY, MI -With margins and sales both under pressure as it cleared the decks of excess inventory, Kmart posted a worse-than-expected third-quarter loss of $67 million, compared with a year-ago profit of $27 million.
Sales at the giant discounter edged ahead by 3.0 percent, to $8.2 billion from $8.0 billion a year ago, and same-store sales improved by 1.4 percent.
"Our overall performance fell short in the third quarter primarily due to soft sales as our liquidation of inventory cannibalized our regular sales," explained Chuck Conaway, new chairman and ceo. "It is clear, however, that we are building momentum as our total units increased by 2.7 percent, even though the average retail selling price declined by 1.2 percent.
The heavy promoting clearly did the job it was meant to do, and inventories declined by 6.7 percent, to $6.6 billion from $7.1 billion last year, a big reduction of $475 million.
Squeezed thin by markdown pressure, average gross margin contracted by 100 basis points, to 20.5 percent from 21.5 percent a year ago.
|
Qtr. 10/25 (x000) |
2000 |
1999 |
%CHG |
|---|---|---|---|
|
Sales |
$8,199,000 |
$7,962,000 |
3.0 |
|
Oper. income (EBIT) |
(16,000) |
135,000 |
- |
|
Net income |
(67,000)a |
27,000a |
- |
|
Per share (diluted) |
(0.14) |
0.05 |
- |
|
Average gross margin |
20.5% |
21.5% |
- |
|
SG & A expenses |
20.7% |
19.8% |
- |
( ): Denotes loss
a-Third-quarter results were reduced by an $11 million dividend on convertible preferred debt, down from $13 million a year ago. The quarter includes an income-tax benefit of $31 million, vs. a $19 million tax payment the prior year.
