Kmart Corp. has reaffirmed its commitment to a "fast-track reorganization" with the objective of emerging from Chapter 11 bankrupty court protection by July 2003. Kmart also reported that its comparable-store sales trend improved significantly in September and the first half of October, aided by successful promotions and store initiatives.
Under a timeline reviewed last week with its Board of Directors and the three independent statutory committees in its Chapter 11 reorganization case, Kmart expects to complete a comprehensive five-year business plan by year-end 2002. The company also intends to file a proposed plan of reorganization and disclosure statement with the U.S. Bankruptcy Court for the Northern District of Illinois on or before February 24, 2003.
"We have provided a timeline to our Board and statutory committees that provides for Kmart to emerge from Chapter 11 protection as early as the first half of 2003," said James B. Adamson, Kmart's chairman and CEO. "This timeline is aggressive and will require a lot of hard work in a relatively short period of time, but should be doable. I have always believed that this company should not remain under court protection a day longer than necessary, and Kmart's management team is focused on achieving the operational, financial and legal objectives that must be met for the company to conclude its reorganization. I am as confident as ever that Kmart can emerge from Chapter 11 as a strong and viable competitor with a clearly defined niche in the discount retail sector."
But Kmart's sales are still slipping, though the drop is less than in August. In its monthly operating report for the four weeks ended September 25, 2002, which was filed today with the court and the Securities and Exchange Commission, Kmart reported that its comparable store sales in September declined 6.9% from the same period a year ago. That's a five percentage point improvement on its August comp-store sales. Since its Chapter 11 filing in January 2002, Kmart's monthly comparable store sales decline has averaged about 11%.
In its monthly operating report, Kmart also reported that it had availability under its debtor-in-possession (DIP) facility of approximately $1.5 billion as of September 25, 2002. The company's net loss for September was $176 million. "Our liquidity continues to be better than our internal projections and we believe we have planned prudently for the holiday season," said Al Koch, Chief Financial Officer.
There are more than 1,800 Kmart and Kmart SuperCenter retail outlets across the country.