Kmart Posts $753-Million Loss After Filing for Chapter 11

Kmart Corp., the biggest U.S. retailer to file for bankruptcy, had a $753-million loss in the five weeks after it sought protection from creditors as consumers abandoned the discount chain in favor of rivals.

The results include an $815-million write-down for tax benefits that were lost because of the company’s bankruptcy, Kmart said in a filing with the Securities and Exchange Commission.

This is the first time the retailer has provided details about its financial condition since filing for Chapter 11 on Jan. 22. Kmart sought bankruptcy protection after holiday sales fell and key suppliers, such as grocery distributor Fleming Cos., halted shipments because of concerns about being paid.

“Unless they can demonstrate that they’re taking steps to recapture market share, this is not a very good omen,” said Kurt Barnard, president of Barnard’s Retail Trend Report.

Sales at stores open at least a year declined 0.1% in January and 11% in February, Kmart said in the filing. In contrast, February same-store sales jumped 10% at larger rival Wal-Mart Stores Inc., and 8.5% at Target Corp.

The company had gains of $138 million from canceling leases on stores that had been closed and $173 million from a reduction in the amount that must be set aside to cover general lawsuit claims, spokesman Michael Freitag said.