Kmart Posts Big Loss During First Quarter

Kmart Corp. lost $28 million in the first quarter, but the nation’s second biggest retailer said today its sales improved and cost-cutting programs were on track.

The loss amounted to 6 cents a share for the quarter ended April 26, compared with a profit $18 million, or 4 cents a share, a year earlier.

The net earnings figures reflected a one-time gain of 18 cents a share from the replacement of the company pension plan with a profitsharing plan, and a loss of 14 cents a share from the effects of a new inventory accounting system.

Sales for the quarter rose 8.1 percent to $7.8 billion from $7.2 billion a year ago.

The company said its gross profit margin declined because it sold a higher proportion of lower-profit merchandise, and higher promotion expenses. The inventory accounting change also reduced the margin.

Other contributors to the negative earnings report were operating losses at Kmart’s Builders Square unit and high startup costs and currency problems at its Kmart Mexico joint venture.