K mart Income Drops 48% in 2nd Quarter

K mart, the nation’s second-largest retailer, said Monday that its second-quarter profit plummeted 48% to $74.8 million from the same period a year ago. Weak sales and higher operating costs were cited.

The company, which operates discount and department stores as well as chains of drugstores and book retailers, also said it expects pressure on profits to continue through the fall.

Earnings for the current quarter ended July 31 compared to $144.4 million for the 1984 period. Although its profit for the first quarter of 1985 was about even with year-ago figures, analysts had predicted that the company would increase its earnings this year.

The poor showing reflects continued softness at its discount stores, where sales declined 1.5% during the quarter, according to Robert Brewer, senior vice president-finance. Improved sales at some of its recently acquired companies helped raise the overall sales performance 8% to $5.46 billion for the period.

Brewer said poor sales in June and July upset the company’s efforts to improve its profit margins in a period when fixed costs continue to rise.

The company also pointed to higher interest expenses for carrying debt to pay for recent acquisitions as a factor in the earnings decline.

Net interest on debt was $46.1 million for the 1985 second quarter, compared to $19.1 million posted for the second-quarter in 1984, primarily from costs of Waldenbooks, Builders Square and Pay Less Drug Stores acquisitions.

K mart Chairman Bernard Fauber said in a statement that the company anticipated that the third quarter would similarly be weak but that there should be an upturn in the fourth quarter, which includes the Christmas holiday selling season.