Kmart vs. Target is no contest

The 3.9% same-store sales decline Kmart reported last week may be better than the 6.2% drop reported by Target, but to come to that conclusion you have to look past the fact that the productivity of Kmart’s selling space is already so low it is running out of room to decline further. Sales per square foot were about $125, and average sales per store were slightly less than $12 million, as of the end of its most recent fiscal year, and both those measures declined further in the second quarter. Kmart’s total sales declined by roughly $250 million dollars to slightly more than $3.7 billion, as it ended its second quarter with 1,352 stores, 30 few units than the prior year. Gross margins declined to 22.1% compared with 22.9%, while expenses increased to 22.5% compared to 21.5%. With expenses in excess of gross margins, the Sears Holdings division produced a $51 million quarterly operating loss. By comparison, Target produced record second quarter gross margins of 31.9% even though its expenses increased to 26.6%.