Kmart Corp chairman and chief executive Chuck Conaway says he expects sales to increase slightly this year despite tough trading conditions.

Addressing industry analysts at Kmart's investor meeting yesterday, Mr Conaway said he expects sales at stores open at least one year to rise in the low single digits for the third and fourth quarters.

He added that the company was estimating conservatively, considering the current economic climate and unveiled a long-term plan showing how the nation's third-largest retailer, aims to compete with its two main rivals, Wal-Mart and Target.

Mr Conaway also announced that prices on more than 30,000 items would be slashed by the end of the month and projected gross margin rates for the remainder of 2001 would rise 10 to 30 basis points over last year's total.

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