Don’t look now, but…

Kmart doesn’t get much respect these days and for good reason. The company was a perennial laggard, which is why it was forced to file for bankruptcy in May 2003; now, six years later, the company still doesn’t appear to be a major competitive threat, based on persistently weak sales trends and a reluctance to invest capital to upgrade stores. Kmart is a name seldom mentioned in the same breath as Target or Walmart, and yet the company still manages to appeal to enough customers that they spent $3.6 billion at the retailer’s 1,364 stores during the first quarter. That’s $140 million less than the previous year, and first quarter comps declined by 2.1%, but still the company swung to profitability with a first-quarter operating profit of $17 million compared to a loss of $21 million last year. Kmart also posted improvements in its gross margin rate, now 23.9%, compared to 23.2% last year, and expenses as a percent of sales, which declined to 22.7% from 22.9% a year ago. Those aren’t impressive gains, but progress is progress, and the fact is Kmart remains a brand synonymous with low prices that continues to hang around even if it is overlooked in discussions regarding Target and Walmart.