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KMART CORPORATION REPORTS SECOND-QUARTER SALES AND EARNINGS

 KMART CORPORATION REPORTS SECOND-QUARTER SALES AND EARNINGS
 TROY, Mich., Aug. 17 /PRNewswire/ -- Kmart Corporation (NYSE: KM) reported increased 1992 second-quarter sales and net income, Chairman of the Board and Chief Executive Officer Joseph E. Antonini announced today.
 Net income for the 13 weeks ended July 29, 1992, increased 2.9 percent to $168 million from $163 million for the 13 weeks ended July 31, 1991. However, reflecting an increase in the average number of common and common equivalent shares because of a PERCS offering in August 1991, earnings per share were 37 cents, compared with 1991's 40 cents, as adjusted for the 2-for-1 stock split distributed June 5, 1992. Second-quarter sales reached a record $9.14 billion, an increase of 8.8 percent from $8.40 billion for the same period in 1991.
 Net income for the first 26 weeks of 1992 increased 5.1 percent to $284 million from 1991's $270 million. Earnings per share were 62 cents, compared with 67 cents in the year-ago period, as adjusted for the 2-for-1 stock split, with the comparison affected by the increase in the average number of common and common equivalent shares. Sales rose 8.5 percent to $17.41 billion from $16.05 billion for the same 26-week period of 1991.
 The gross margin for the quarter was lower than a year ago, at 23.9 percent of sales versus 24.9 percent, reflecting increased clearance markdowns of spring-season merchandise lines and the greater sales contribution of the lower-margined PACE Membership Warehouse operation in the second quarter of 1992. The pretax LIFO charge for the second quarter of 1992 was $13 million, compared with $15 million in the prior year. For the 26-week periods, the pretax LIFO charge amounted to $35 million in 1992 and $45 million in 1991.
 The selling, general and administrative (SGA) expense ratio was 0.8 percent lower at 21.0 percent of sales in the second quarter of 1992, versus 21.8 percent of sales for the comparable 1991 period, as a result of the effectiveness of cost-control programs at the Kmart store division.
 In commenting on results, Antonini said, "Kmart customers have reacted favorably to our 'new look' stores and to our merchandising programs, and this contributed importantly to the improvement in sales and net income in our 1992 second quarter. It was a difficult period, however. Consumers remained cautious in their spending and colder-than- normal weather in both May and June adversely affected a number of important Kmart discount store spring businesses such as apparel and our outdoor garden shop. The weather was in sharp contrast to the 1991 period when unseasonably warm temperatures early in the second quarter contributed to an excellent early sell-thru of seasonal merchandise. Aided by warmer temperatures, sales were very strong in July but July is a much more promotional month than May and June, and this exerted pressure on our gross margins and profitability in the second quarter."
 Antonini continued, "We are pleased with the progress made by the Kmart Specialty Retail Group in the 1992 second quarter. Five of the six businesses performed very well for the quarter and either met or exceeded their profit plan. Profits at PACE Membership Warehouse were adversely affected by a very rapid expansion program this year, with the majority of new stores opening in competitive markets. Also contributing to the profit shortfall at PACE was the lower-than-plan comparable store sales gain, although the 10.9-percent increase was among the best in the warehouse club industry."
 Antonini added, "Our store opening, relocation, enlargement and refurbishment program is progressing on schedule. We completed 225 projects in the 1992 first half, 121 in the first quarter and 104 in the second. Through midyear 1992, including stores completed in 1991 and 1990, 907 stores have been completed with the updated look, representing 40 percent of our U.S. Kmart stores. We are working to complete a total of 450-500 projects during 1992 so, by this year end, approximately 50 percent of the U.S. store base will be in the new modern format. The planned improvement in these updated stores is being realized."
 Kmart Corporation serves America with over 4,000 retail outlets in all 50 states in the United States and in Puerto Rico, Canada and Czechoslovakia. Kmart, currently operating 2,383 Kmart stores, is also the parent company for PACE Membership Warehouse, Builders Square, PayLess Drug Stores, Waldenbooks, The Sports Authority and OfficeMax. 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 29, 1992 and July 31, 1991
 Sales
 Percent Change
 All Comp.
 (Millions U.S. $) 1992 1991 Stores Stores
 General Merchandise
 United States $6,210 $5,963 4.1 2.2
 International 249 246 1.1 (4.7)
 Total General Merchandise 6,459 6,209 4.0 2.0
 Specialty Retail Group
 PACE Membership Warehouse 1,065 875 21.7 10.9
 Builders Square 688 588 17.0 9.2
 PayLess Drug Stores 502 445 12.9 2.1
 Waldenbooks 246 241 1.9 2.4
 The Sports Authority 91 47 92.2 9.1
 OfficeMax(a) 90 N/A --- 28.8(a)
 Total Specialty Retail Group 2,682 2,196 22.1 8.1(a)
 Total Kmart $9,141 $8,405 8.8 3.6(a)
 Operating Income
 Percent
 (Millions U.S. $) 1992 1991 Change
 General Merchandise
 United States $297 $284 4.5
 International 4 2 78.7
 Total General Merchandise 301 286 5.1
 Specialty Retail Group
 PACE Membership Warehouse --- 11 ---
 Builders Square 28 25 12.6
 PayLess Drug Stores 20 16 26.7
 Waldenbooks (5) (7) 25.3
 The Sports Authority 3 1 ---
 OfficeMax(a) (5) N/A ---
 Total Specialty Retail Group 41 46 (10.0)
 Total Kmart $342 $332 3.0
 (a) OfficeMax was acquired in November 1991. On a proforma basis, total sales increased 93.4 percent and comparable store sales were up 28.8 percent. Excluding OfficeMax, the comparable store sales increases for the Total Specialty Retail Group and for Total Kmart were 7.7 percent and 3.4 percent, respectively.
 Sales and Operating Income by Business
 26 Weeks Ended July 29, 1992 and July 31, 1991
 Sales
 Percent Change
 All Comp.
 (Millions U.S. $) 1992 1991 Stores Stores
 General Merchandise
 United States $11,842 $11,415 3.8 1.8
 International 463 468 (1.0) (4.2)
 Total General Merchandise 12,305 11,883 3.6 1.6
 Specialty Retail Group
 PACE Membership Warehouse 2,031 1,667 21.8 11.7
 Builders Square 1,246 1,076 15.8 9.0
 PayLess Drug Stores 980 860 13.9 0.7
 Waldenbooks 490 475 3.1 3.3
 The Sports Authority 173 88 97.1 13.8
 OfficeMax(a) 182 N/A --- 31.1(a)
 Total Specialty Retail Group 5,102 4,166 22.5 8.3(a)
 Total Kmart $17,407 $16,049 8.5 3.3(a)
 Operating Income
 Percent
 (Millions U.S. $) 1992 1991 Change
 General Merchandise
 United States $548 $525 4.3
 International 3 3 3.9
 Total General Merchandise 551 528 4.3
 Specialty Retail Group
 PACE Membership Warehouse --- 14 ---
 Builders Square 44 37 17.7
 PayLess Drug Stores 41 34 22.5
 Waldenbooks (14) (16) 16.2
 The Sports Authority 5 --- ---
 OfficeMax(a) (5) N/A ---
 Total Specialty Retail Group 71 69 3.2
 Total Kmart $622 $597 4.2
 (a) OfficeMax was acquired in November 1991. On a proforma basis, total sales increased 91.4 percent and comparable store sales were up 31.1 percent. Excluding OfficeMax, the comparable store sales increases for the Total Specialty Retail Group and for Total Kmart were 7.8 percent and 3.1 percent, respectively.
 13 Weeks Ended
 Percent
 July 29, July 31, Inc.
 1992 1991 (Dec.)
 (In millions)
 Sales $9,141 $8,405 8.8
 Licensee fees and
 other income 93 90 4.2
 Gross revenue 9,234 8,495 8.7
 Cost of merchandise sold 6,955 6,309 10.2
 Selling, general and
 administrative expenses 1,921 1,835 4.7
 Interest - net
 Debt 59 59 ---
 Capital leases 45 45 ---
 Income before income taxes 254 247 2.8
 Income taxes 86 84 2.6
 Net income $168 $163 2.9
 Earnings per common and
 common equivalent share $.37 $.40 (7.5)
 Weighted average shares 455.5 404.5 ---
 26 Weeks Ended
 Percent
 July 29, July 31, Inc.
 1992 1991 (Dec.)
 Sales $17,407 $16,049 8.5
 Licensee fees and
 other income 153 152 1.0
 Gross revenue 17,560 16,201 8.4
 Cost of merchandise sold 13,202 12,056 9.5
 Selling, general and
 administrative expenses 3,723 3,530 5.5
 Interest - net
 Debt 114 116 (1.3)
 Capital leases 91 89 2.6
 Income before income taxes 430 410 5.0
 Income taxes 146 140 4.7
 Net income $284 $270 5.1
 Earnings per common and
 common equivalent share $.62 $.67 (7.5)
 Weighted average shares 455.2 404.5 ---
 Per-share amounts and weighted average shares have been adjusted to reflect the 2-for-1 stock split declared March 24, 1992, and distributed June 5, 1992.
 -0- 8/17/92
 /CONTACT: Orren F. Knauer of Kmart Corporation, 313-643-1040/
 (KM) CO: Kmart Corporation ST: Michigan IN: REA SU: ERN


DH-ML -- DE001 -- 0349 08/17/92 08:35 EDT
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