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Kmart Loss Shrinks

The retailer shows progress in its comeback from Chapter 11 bankruptcy protection.
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Kmart

(KMRT)

on Friday reported a much smaller loss in the third quarter, but sales were also down sharply from a year ago in the aftermath of the company's Chapter 11 bankruptcy filing.

The Troy, Mich.-based retailer, which emerged from Chapter 11 protection in May, lost $23 million, or 26 cents a share, in the third quarter ended Oct. 30, compared with a loss of $383 million, or 76 cents a share, a year ago. No consensus estimate of analysts was available.

Revenue fell more than 21% to $5.09 billion, from $6.46 billion, as the company continued to close stores as part of its bankruptcy court-approved reorganization. Same-store sales fell 8.6%.

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Kmart also offered an insight into business conditions during the current quarter, saying that although same-store sales dropped in November, the company was profitable.

Gross margin, as a percentage of sales, increased to 22.9% from 17.1% a year ago because of lower distribution costs and depreciation expenses, and the write-off of long-term assets.

Kmart's was the largest retail bankruptcy filing in U.S. history. The company is now operating under new management.

At the end of the quarter, the company had approximately $900 million in cash and cash equivalents, and a borrowing availability of approximately $1.6 billion on its $2 billion credit line. The company said it "has since voluntarily reduced the size of its credit facility to $1.5 billion to reduce the overall cost of the facility."

Recently, the company's shares were down $1.78, or 5.7%, to $29.52.