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KMART CORPORATION REPORTS 1993 SECOND-QUARTER SALES AND EARNINGS

 TROY, Michigan, August 16, 1993 /PRNewswire/ -- Kmart Corporation
 (NYSE: KM) reported increased sales but lower net income for the
 1993 second quarter, chairman of the board and chief executive
 officer Joseph E. Antonini announced today.
 Net income for the 13 weeks ended July 28, 1993 declined 39.0% to
 $102 million from $168 million for the 13 weks ended July 29, 1992.
 Earnings per share were 22 cents, compared with 1992's 37 cents.
 Second-quarter sales reached a record $10.20 billion, an increase of
 11.6% from $9.14 billion for the same period in 1992.
 Net income for the 26 weeks of 1993 before an extraordinary item and
 the effects of accounting changes reported in the 1993 first quarter
 declined 46.4% to $152 million from 1992's $284 million. Earnings
 per share on the same basis were 33 cents, compared with 62 cents in
 the year-ago period. Sales rose 10.4% to $19.23 billion from
 $17.41 billion for the same 26-week period of 1992.
 The gross margin for the quarter was lower than a year ago, at 23.3%
 of sales versus 23.9%, primarily reflecting a sales mix skewed
 towards lower-margined items in the U.S. Kmart stores. The pretax
 LIFO charge was $13 million in the second quarters of both years.
 For the 26-week periods, the pretax LIFO charge amounted to
 $27 million in 1993 and $35 million in 1992.
 The selling, general and administrative (SGA) expense ratio was
 21.5% of sales in the second quarter of 1993, versus 21.0% of sales
 for the comparable 1992 period. This increase is primarily a result
 of below-plan sales at PACE Membership Warehouse and expenses
 related to the sale and closing of 17 PACE clubs.
 Net interest expense on debt was $78 million, up 33.0% from
 $59 million in the 1992 second quarter. The increase was the result
 of greater borrowings resulting from higher inventory levels in the
 1993 period and the acquisitions made in 1992 and of BizMart in
 March 1993. The increase in inventories is largely the result of
 the Borders and BizMart acquisitions; the Kmart store renewal
 program, including new, relocated and enlarged stores; and
 aggressive new store opening programs in the specialty group.
 "Sales in the July quarter in the U.S. Kmart division were much
 improved from results in the first three months of the year which
 were severely impacted by winter storms," said Antonini. "The
 warmer weather during the last several weeks of the quarter helped
 sales in most categories in the Kmart stores. With the exception of
 PACE Membership Warehouse, we are pleased with the performance of
 the specialty store businesses in the second quarter."
 "The profit shortfall in the second quarter reflected the higher
 proportion of Kmart division sales in lower-margined merchandise
 categories, the substantial loss at PACE Membership Warehouse and
 the increase in interest expense on debt."
 "The improving sales pattern of recent months is very encouraging as
 we enter the higher-volume part of the year. Consumers are
 responding very well to all of our merchandising and pricing
 programs. If this sales strength continues, we expect earnings in
 the second half of 1993 to be above last year's level, influenced
 obviously by the strength in consumer spending, as well as
 seasonable weather, during the remainder of the year."
 Kmart Corporation serves America with over 4,000 retail outlets in
 all 50 states in the United States and in Puerto Rico, Canada, the
 Czech Republic and Slovakia. Kmart, currently operating 2,423 Kmart
 stores, is also the parent company for PACE Membership Warehouse,
 Builders Square, PayLess Drug Stores, Waldenbooks, The Sports
 Authority, OfficeMax and Borders.
 Kmart Corporation's stock is listed on the New York, Pacific and
 Midwest Stock Exchanges. Its trading symbol is KM.
 KMART CORPORATION
 SALES AND OPERATING INCOME BY BUSINESS
 13 WEEKS ENDED JULY 28, 1993 AND JULY 29, 1992
 SALES
 % Change
 All Comparable
 (Millions U.S. $) 7-28-93 7-29-92 Stores Stores
 General Merchandise
 United States $ 6,642 $ 6,210 7.0 4.6
 International 258 249 3.8 2.6 (b)
 Total General Merchandise 6,900 6,459 6.8 4.5
 Specialty Retail
 PACE Membership Warehouse 1,147 1,065 7.7 (7.0)
 Builders Square 794 688 15.4 1.4
 PayLess Drug Stores 612 502 21.9 (5.2)
 Waldenbooks 244 246 (0.7) 0.4
 The Sports Authority 146 91 59.2 4.9
 OfficeMax 310 90 243.9 18.9
 Borders(a) 45 N/A - 12.5 (a)
 Total Specialty Retail 3,298 2,682 22.9 (2.3)(a)
 Total Kmart $10,198 $ 9,141 11.6 2.5 (a)
 OPERATING INCOME
 (Millions U.S. $) 7-28-93 7-29-92 % Change
 General Merchandise
 United States $ 259 $ 297 (12.7)
 International 2 4 (47.9)
 Total General Merchandise 261 301 (13.2)
 Specialty Retail
 PACE Membership Warehouse (39) - -
 Builders Square 31 28 7.6
 PayLess Drug Stores 20 20 1.7
 Waldenbooks (5) (5) (9.2)
 The Sports Authority 6 3 89.6
 OfficeMax (6) (5) (35.1)
 Borders(a) - N/A -
 Total Specialty Retail 7 41 (84.2)
 Total Kmart $ 268 $ 342 (21.8)
 (a) Borders was acquired in November 1992. On a proforma basis,
 total sales increased 85.0% and comparable store sales were up
 12.5%. Excluding Borders, the comparable store sales changes for
 Total Specialty Retail and Total Kmart were (2.5%) and 2.5%,
 respectively.
 (b) International Comparable Store Sales Change is calculated on
 sales in the applicable local currency.
 KMART CORPORATION
 SALES AND OPERATING INCOME BY BUSINESS
 26 WEEKS ENDED JULY 28, 1993 AND JULY 29, 1992
 SALES
 % Change
 All Comparable
 (Millions U.S. $) 7-28-93 7-29-92 Stores Stores
 General Merchandise
 United States $12,467 $11,842 5.3 3.2
 International 487 463 5.2 0.5 (b)
 Total General Merchandise 12,954 12,305 5.3 3.0
 Specialty Retail
 PACE Membership Warehouse 2,217 2,031 9.2 (6.6)
 Builders Square 1,396 1,246 12.1 (1.0)
 PayLess Drug Stores 1,217 980 24.2 (3.9)
 Waldenbooks 489 490 (0.3) 0.9
 The Sports Authority 265 173 53.3 1.6
 OfficeMax 600 182 229.0 16.3
 Borders(a) 87 N/A - 10.9 (a)
 Total Specialty Retail 6,271 5,102 22.9 (2.7)(a)
 Total Kmart $19,225 $17,407 10.4 1.4 (a)
 OPERATING INCOME
 (Millions U.S. $) 7-28-93 7-29-92 % Change
 General Merchandise
 United States $ 470 $ 548 (14.4)
 International 2 3 (18.7)
 Total General Merchandise 472 551 (14.4)
 Specialty Retail
 PACE Membership Warehouse (63) - -
 Builders Square 31 44 (28.5)
 PayLess Drug Stores 42 41 0.9
 Waldenbooks (12) (14) 11.7
 The Sports Authority 6 5 36.8
 OfficeMax (6) (5) (21.6)
 Borders(a) - N/A -
 Total Specialty Retail (2) 71 -
 Total Kmart $ 470 $ 622 (24.4)
 (a) Borders was acquired in November 1992. On a proforma basis,
 total sales increased 87.8% and comparable store sales were up
 10.9%. Excluding Borders, the comparable store sales changes for
 Total Specialty Retail and Total Kmart were (2.8%) and 1.4%,
 respectively.
 (b) International Comparable Store Sales Change is calculated on
 sales in the applicable local currency.
 %
 13 Weeks Ended Inc.
 7-28-93 7-29-92 (Dec.)
 (Millions U.S. $)
 Sales $10,198 $ 9,141 11.6
 Licensee fees and
 other income 102 93 10.1
 Gross revenue 10,300 9,234 11.6
 Cost of merchandise sold 7,820 6,955 12.4
 Selling, general and
 administrative expenses 2,195 1,921 14.3
 Interest - net
 Debt 78 59 33.0
 Capital leases 51 45 11.1
 Income before income taxes 156 254 (38.4)
 Income taxes 54 86 (37.3)
 Net income $ 102 $ 168 (39.0)
 Earnings per common and
 common equivalent share: $ .22 $ .37 (40.5)
 Weighted average shares 462.7 455.5
 %
 26 Weeks Ended Inc.
 7-28-93 7-29-92 (Dec.)
 (Millions U.S. $)
 Sales $19,225 $17,407 10.4
 Licensee fees and
 other income 168 153 9.3
 Gross revenue 19,393 17,560 10.4
 Cost of merchandise sold 14,713 13,202 11.4
 Selling, general and
 administrative expenses 4,192 3,723 12.6
 Interest - net
 Debt 156 114 36.7
 Capital leases 99 91 8.8
 Income before income taxes 233 430 (45.9)
 Income taxes 81 146 (45.0)
 Income before extraordinary
 item and the effect of
 accounting changes 152 284 (46.4)
 Extraordinary item (a) (10) - -
 Effect of accounting changes (a) (17) - -
 Net income $ 125 $ 284 (56.1)
 Earnings per common and
 common equivalent share:
 Before extraordinary item
 and the effect of accounting
 changes $ .33 $ .62 (46.8)
 Extraordinary item (a) (.02) - -
 Effect of accounting changes (a) (.04) - -
 Net Income $ .27 $ .62 (56.5)
 Weighted average shares 463.1 455.2
 (a) In the 26 weeks ended July 28, 1993, the company recorded an
 extraordinary charge of $10 million, net of applicable income taxes,
 equal to $.02 per share resulting from a redemption premium for the
 early redemption of $200 million of 10 1/2% Sinking Fund Debentures
 due December 1, 2017. In addition, as a result of adopting
 Financial Accounting Standard No. 109, which requires that deferred
 taxes be calculated using the liability approach rather than the
 deferred method, and Financial Accounting Standard No. 106, which
 requires the company to accrue for future postretirement medical
 benefits, the company recorded a net charge for accounting changes
 of $17 million, net of applicable taxes, equal to $.04 per share.
 -0- 8/16/93
 /CONTACT: Orren F. Knauer or Lois M. Connelly, Investor Relations, Kmart Corporation, 313-643-1040/
 (KM)


CO: Kmart Corporation ST: Michigan IN: REA SU: ERN

ML -- DE006 -- 2935 08/16/93 09:33 EDT
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Date:Aug 16, 1993
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