Kmart Posts Profit of $34 Million, Its First Gain in Nearly 2 Years

After 13 consecutive quarters of losses or lower earnings, Kmart Corp. had a bit of good news to report Wednesday: a modest $34-million profit in the second quarter.

The battered discount retailer said its earnings for the quarter amounted to 7 cents a share, contrasted with a loss of $54 million, or 12 cents a share, in the same period of 1995. It was Kmart’s first profit on continuing operations since the third quarter of 1994.

The performance was in line with Wall Street expectations. Joseph Ronning of Brown Bros. Harriman in New York said Kmart’s second-quarter performance “offers a glimmer of hope for the future.”

“You had weak sales and a mix of business that was skewed toward low-margin products,” Ronning said. “Despite this, they were able to show a modest improvement in earnings.”

Sales totaled $8.31 billion, down from $8.44 billion a year ago. Kmart’s Builders Square home improvement unit had sales of $746 million, down from $758 million a year earlier.

Earnings for the second quarter of 1995 were affected by a $76-million charge related to store closures and other discontinued operations. Without the charge, Kmart would have earned $22 million, or 5 cents a share.

Ronning said the most encouraging news from Wednesday’s earnings report was that Kmart’s sales, general and administrative expenses declined $117 million from a year ago.

Sales in U.S. Kmart stores open at least a year were up 2.2%, below the company’s expectations. Kmart’s Canadian stores also had a weak performance.

Kmart, based in the Detroit suburb of Troy, operates 2,143 Kmart stores and 168 Builders Square stores in the United States, and 134 stores elsewhere.