Lower Profit Margins Blamed For Kmart’s $69 Million Loss

Lower profit margins, aggressive clearance sales and the costs of liquidating closed stores contributed to a $69 million third-quarter loss for Kmart Corp., the discount retailer said Thursday.

The loss amounted to 15 cents a share, compared with profit of 8 cents a share in the 1994 quarter, when net earnings were $39 million. Losses from continuing operations, without the effect of a $48 million gain from the sale of its Sports Authority unit, were $118 million, or 26 cents a share, vs. a profit of $21 million, or 4 cents a share, in the year-ago period.

Chairman Floyd Hall said the company was satisfied with the momentum of sales in its U.S. stores - a 4.1 percent increase in comparable store sales for the quarter and 5.4 percent for the year’s first nine months. “However, our gross margin shortfalls continue to be a major problem,” he said.

For the 13 weeks ended Oct. 25, the company’s revenues were $8 billion, up 2.5 percent from $7.8 billion in the 1994 quarter. Nine-month revenues were $24 billion vs. $22.8 billion last year.

Also Thursday, Campbell Soup Co. reported improved earnings for its latest quarter.

For the three months ended Oct. 29, Campbell’s fiscal first quarter, the food maker earned $219 million, or 88 cents a share, up from $197 million, or 79 cents a share, in the same period a year ago.

Sales for the quarter totaled $1.99 billion, up 7 percent from $1.86 billion in the same period last year.