K Mart Corp said its record fiscal1986 net earnings of 582.3 mln dlrs, a rise from 221.2 mln dlrs
a year ago, marked a "major turning point" for the world's
second biggest retailer.
    K Mart said the earnings rise for the fourth quarter ended
January 28 to 285 mln dlrs from 10.5 mln dlrs resulted from 
"merchandising, refurbishing and expense control."
    A year ago, K Mart took a charge of 239 mln dlrs for
discontinued operations. Earnings from continuing retail
operations in the quarter totalled 270 mln dlrs or 2.00 dlrs a
share compared with 249.4 mln dlrs or 1.91 dlrs a year ago.
    K Mart Chairman Bernard Fauber said "the success of these
programs is better illustrated by the strong 35.9 pct increase
in 1986 income from continuing operations before income taxes
to 1.03 billion dlrs, the first time K Mart Corp has reached
this milestone."
    Sales for the 1986 fiscal year reached a record 23.8
billion dlrs, an 8.1 pct rise from 22.04 billion dlrs the prior
year. K Mart said 1985 was restated to account for discontinued
operations. Comparable store sales rose 5.5 pct in 1986 over
1985, it said.
    Fauber said the sales growth came from greater consumer
acceptance of K Mart's apparel merchandise, "a marked increase
in hardline merchandise sales and a growing contribution from
specialty retailing operations."
    K Mart said its fourth quarter pre-tax income from
continuing operations was 493 mln dlrs, a 32.3 pct gain from
372.6 mln dlrs last year. It said sales in the period grew 8.8
pct to 7.23 billion dlrs from a restated 6.65 billion dlrs in
1985 with comparable store sales up 4.7 pct.
    K Mart said its effective tax rate rose in 1986 to 44.6 pct
from 37.6 pct in 1985. But it said selling, general and
administrative expense eased to 23.2 pct of sales from 23.7 pct
in 1985.
    "Our performance in 1986 marks a major turning point for K
Mart," Fauber said in a statement.
    "In the years immediately prior to 1986, we focused on
changing the look of our stores and the structure of the
company."
    K Mart, he said, committed billion of dollars for store
remodeling and installing a centralized point of sale system,
upgraded its merchandise mix, acquired three large specialty
retailers, divested underperforming businesses and restructured
its long-term debt.
    "We were forced to pay a temporary price in the form of
slower earnings growth and a lower rating by the investment
community. However, beginning with the fourth quarter of 1985,
our improved performance is proof that our approach is correct
for the long term," the K Mart chairman said.
 Reuter
