Kmart Is Un-Bankrupt7 May, 2003 By: Joan Villa
After more than 15 months in the largest-ever Chapter 11 retail filing, Kmart emerged from bankruptcy last week pared down to 1,513 stores and with a new $2 billion credit facility.
CEO Julian Day said the process made the company more efficient and lowered overall operating costs.
The plan gives ESL Investments 49 percent of Kmart's newly reissued stock, and immediately following the bankruptcy exit, ESL owner Edward S. Lampert was appointed chairman of the board of Kmart Holding Co. The change gives the board a “substantial investment in the company,” Lambert said, that “will ensure that decisions will be made by investors who have something to lose, as well as gain.”
Kmart reported that same-store sales for the five-week period ended April 2 declined 7.4 percent from the year-ago period, which included Easter holiday sales. The holiday shift contributed to an 1.1 percent increase in April same-store sales from the same period in 2002.
For the four-week period ended March 26, the retailer reported a net loss of $483 million on sales of $1.896 billion.
Day has projected that the company will finish the year with a net loss of $588 million on sales of $25.4 billion, with cash flow -- or earnings before interest, taxes, depreciation and amortization [EBITDA] – of $75 million.