US discount retailer Kmart has reported a first-quarter net profit, compared to a net loss a year earlier.

The company, which emerged from bankruptcy in May last year, posted net income of US$93m for the first quarter to 28 April, compared to a year-earlier loss of $862m when the company was still in bankruptcy.

Operating income was $165m, or 3.6% of sales, compared to a loss of $39m, or negative 0.6% of sales, for the same period in 2003. Kmart said the improvement was primarily due to the decrease in selling, general and administrative expenses and the improvement in gross margin rate, partially offset by an overall decline in gross margin dollars due to a reduced store base.

Total first-quarter sales fell 25.3% compared to the year-ago quarter, while same-store sales decreased 12.9%. The company said the decrease in same-store sales is due primarily to several company-wide promotional events that occurred in the first quarter of fiscal 2003 along with a reduction in advertising. The decrease in total sales is attributable to the decrease in same-store sales and the closure of 316 stores in the first quarter of fiscal 2003.

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