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K MART ANNOUNCES RESTRUCTURING, REMAINS ON DUFF & PHELPS RATING WATCH - DOWN

 CHICAGO, Jan. 6 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has confirmed that the ratings of K mart Corporation's long-term debt remain on Rating Watch - Down after K mart announced a $850 million after-tax restructuring charge. Duff & Phelps currently rates K mart's senior debt and lease certificates "A" (Single-A) and its preferred stock "A-" (Single-A-Minus).
 Duff & Phelps said it is encouraged by the strategic direction of the domestic general merchandising business's new leadership. The previous store modernization program of 300 relocations and 620 enlargements will be expanded so that 500 more stores will be relocated and 80 more stores will be enlarged. The additional closings and relocations will improve competitiveness, but will require continued aggressive capital spending that will pressure financial leverage. The concurrently announced target stock offering and the probable redemption of preferred stock, both in the second half of 1994, will help bolster the balance sheet.
 While recently progress has been made on reducing inventories, K mart still needs to fully realize the benefits of investments in new inventory management systems. Duff & Phelps also remains concerned about the intensifying competitive environment and its resulting pressures on gross margins, especially in apparel. K mart cannot rely solely on a general economic recovery in order to improve financial and operating performance, but must successfully execute sharpened merchandising strategies.
 -0- 1/6/94
 /CONTACT: Marvin Behm of Duff & Phelps, 312-630-4664/


CO: K mart Corporation ST: Illinois IN: REA SU: RTG

PS -- NY064 -- 7002 01/06/94 12:27 EST
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Publication:PR Newswire
Date:Jan 6, 1994
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