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Monday, 22 July, 2002, 19:52 GMT 20:52 UK
Kmart suffers as Wal-Mart grows
Walmart shopfront
Bankrupt retailer Kmart warned on Monday that its sales were sliding, just as key competitor Wal-Mart told investors that it remained confident about its growth targets.

Kmart said it made a net loss in June, with sales down 8.7% compared with the same stores' performance in June last year.

The figure excludes 283 stores closed before 2 June as part of the reorganisation triggered by its January bankruptcy filing, and is the result of both weak holiday sales and stiff competition.

The competition, meanwhile, is blooming. Wal-Mart said its target of a 5-7% increase in July sales was looking solid, driven by sales of basic commodity goods.

A tale of two retailers

The contrast between the two is stark.

Wal-Mart is going from strength to strength, having seen a near-8% sales gain year on year in June and announced the prospect that profits for the April-June period will be higher than previously expected at 44-45 cents a share.

Kmart, on the other hand, is enmired in its bankruptcy, the result of years of underperformance and a bad reputation for shoddy stores with limited stocks.

Its net loss was $137m (87m) for June on sales of $2.33bn.

It is burning through its cash too, with its bank balance - swelled by a $2bn line of credit - dropping to $1.59bn from $1.85bn at the start of June.

Still, even Wal-Mart has its problems.

A massive recall of 18 million pounds (8.2 million kg) of ground beef distributed by agribusiness giant ConAgra for contamination with the e.coli 0157 bacteria - one of the main causes of food poisoning - could well impact some of its stores, the company said.

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