A bankruptcy court judge on Tuesday approved retail giant's Kmart Corp reorganisation plan which should see it emerge from Chapter 11 on May 5.

The Michigan-based company had planned to exit Chapter 11 late last month but those hopes were dashed when a judge postponed the hearing until this week when he finally gave it the go-ahead.

Kmart, which reported a $3.22 billion loss for fiscal 2002, has axed more than 34,000 jobs and hundreds of stores since it filed for bankruptcy protection amid massive debts at the start of last year.

Delighted president and CEO, Julian Day, said: "Let me just say how jubilant I am, and how jubilant everyone at Kmart is. We will emerge as a vital enterprise, focusing on providing value to our customers and our stakeholders."

He added the revamped discount chain would offer a wider portfolio of private brands and tailor its products to local demographics but admitted it would be tough to catch up with rivals Wal-Mart and Target.