Kmart Holding Corp on Monday posted a narrower first quarter net loss of $862 million versus $1.44 billion in the year-ago period as it took its first steps since emerging from bankruptcy protection last month.

The Michigan-based firm, which axed 600 stores and 54,000 jobs during its 15 months under Chapter 11, said sales in the quarter ended April 30 fell 14 per cent to $6.18bn from $7.18bn, with same-store sales down 3.2 per cent.

It added that excluding interest, reorganisation costs, income taxes and discontinued operations, its loss in the most recent quarter would have been $32m versus $920m last year which included a store-closing liquidation charge of $542m.

The country’s third largest discount chain behind Wal-Mart and Target said its gross margin nearly doubled to $1.42bn from $745m with gross margin as a percentage of sales up to 23 per cent from 10.4 per cent in 2002.

"The increase in gross margin is primarily related to the previously mentioned charge of $542m recorded in the first quarter of 2002 in connection with the store closing liquidation sales," it explained.

"In addition, the company's gross margin rate was favourably impacted by 2003 closing store liquidation sales, a decrease in sales of food and consumables, which carry lower margins, and a decrease in promotional markdowns, partially offset by the impact of clearance markdowns."

President and CEO, Julian Day, commented: "This management team is very focused on building the financial foundation of the new company.

"We are strengthening our business by driving profitable sales, identifying opportunities to further improve efficiency and reduce costs, and enhancing the productivity of our assets. We have increased gross margin, decreased SG&A and carefully managed our inventory."