Kmart Slashes 4th-Quarter Loss 61%

Kmart Corp. on Wednesday said that cost cutting allowed it to dramatically reduce its fourth-quarter net loss by 61% and post its best full-year profit from continuing operations in four years.

The fourth-quarter net loss, which included write-offs and losses from Kmart’s discontinued Builders Square unit, came to $164 million, or 27 cents a share, contrasted with a year-earlier loss of $420 million, or 91 cents a share.

Revenues fell to $9.68 billion from $9.9 billion a year earlier.

Excluding the Builders Square losses, Kmart’s core discount store operations earned a fourth-quarter profit of $235 million, contrasted with a year-ago loss of $118 million. For the full fiscal 1996 year ended Jan. 29, Kmart’s continuing operations earned $231 million, contrasted with a fiscal 1995 loss of $431 million.

Kmart Chairman Floyd Hall said the results mark a rebound from four years of declining earnings and bear out his pledge to restructure the Troy, Mich.-based retail giant.

Kmart’s fiscal 1996 revenues dipped to $31.44 billion from $31.71 billion in fiscal 1995, putting Kmart in third place among the nation’s top retailers, behind Wal-Mart Stores Inc. and Sears, Roebuck & Co.

Most of Kmart’s earnings improvement came from cost cutting. It reduced selling, general and administrative expenses in 1996 by $602 million from 1995 to a total of $6.27 billion, or about 19.9% of sales.

Kmart’s fourth-quarter operating profit slightly exceeded analysts’ consensus estimates, but a company spokesman cautioned that part of that difference was attributable to a tax rate of about 20.5% because of foreign tax benefits.

Kmart shares rose 12.5 cents to close at $13 on the New York Stock Exchange. Kmart’s gross profit margin for the full year was 22.4% of sales versus 22.2% in 1995. Gross margin for the fourth quarter was 21.6% of sales versus 21.0% a year earlier.