Profit Surges at Kmart, Venture Stores

Kmart Corp. and Venture Stores Inc. reported Wednesday that their fourth-quarter earnings soared as cautious consumers continued to spend at discount retailers.

Kmart, the second-largest retailer after discounter Wal-Mart Stores Inc., also got a boost from its specialty store divisions.

Kmart’s earnings shot up 19.2% to $479 million, or $2.11 per share, in the quarter ended Jan. 29 from $402 million, or $2.01 per share, a year earlier.

Revenue rose to $10.72 billion from $9.9 billion.

Kmart, based in Troy, Mich., has outperformed most retailers during the consumer spending slump. Its earnings included the fruits of a program to renovate and improve its stores.

Kmart also had strong sales at its specialty stores, which include Pay Less Drug Stores, Waldenbooks, Sports Authority, Builders Square and PACE Membership Warehouses.

“The specialty stores are doing better than most have expected,” said Wayne Hood, a retail industry analyst for Prudential Securities Inc. in New York.

For the full year, Kmart earned $859 million, or $4.03 per share, up 13.6% from $756 million, or $3.78 per share, in fiscal 1990.

Full-year revenue rose 7.8% to $34.97 billion from $32.45 billion.

Per-share earnings rose only 6.6% because Kmart issued stock in August to raise money for its renovation program.

Sales for the 2,375 Kmart discount stores totaled $25.55 billion, 2.6% above the $24.89 billion of 1990. For established stores, those open at least a year, sales were 2.1% higher.

Established store sales are the most commonly used measure of a retailer’s strength.

The company’s specialty stores had $9.03 billion in full-year sales, up 25.8% from $7.18 billion. Established store sales rose 9%.

Kmart did not break out quarterly results for its divisions.

While Kmart fared better than many retailers, it did feel the pinch of the consumer spending slump, Chairman Joseph Antonini said. “The weak economic environment adversely affected sales of electronics and other big-ticket categories,” he said.

Meanwhile, Venture said it earned $28.4 million, or $1.70 per share, in the quarter ended Feb. 1, up 7.6% from $26.4 million, or $1.57 per share, in the same period a year earlier.

Sales rose to $521.9 million from $479.5 million. Sales at established Venture stores were up 3.5%.

For the full year, Venture reported earnings of $41.5 million, or $2.48 per share, up 20.3% from $34.5 million, or $2.06 per share, in fiscal 1990.

Full-year sales rose to $1.52 billion from $1.42 billion. Established store sales gained 3.4%.

Venture operates 84 discount stores in the South and Midwest.

Earnings, D14