Losses at Kmart, the bankrupt US discount retailer, are continuing, and the company has admitted it does not know when it might be ready to shed protection from its creditors.

The net loss for the three months to 31 July was $377m (�245m), or $333m excluding the cost of discontinued operations and the ongoing reorganisation.

A significant amount [of sales declines] may have been related to perceptions that may have grown out of our performance after bankruptcy

Julian Day Kmart president and chief operating officer

The comparable figure for last year was $304m, while the first four months of 2002 had produced a massive $1.45bn loss thanks to the costs of going into Chapter 11 bankruptcy protection in January.

The disappointing performance means that the original plans to exit Chapter 11 by July 2003 are now off the table, the company's management said.

Sliding sales

The main problem for Kmart is that it has failed to keep up with the competition.

Its distribution and stocking systems, the company has admitted, let it down to the extent that customers attracted by promotions simply could not find the goods they were being prompted to buy.

The distribution at least is now sorted, the company told a conference call, with almost 96% of goods in stock at any one time instead of the 88% figure seen in January.

But sales are still collapsing despite a planned welcome-back sale in June while the competition, principally rival mega-discounter Wal-Mart, is stretching its lead.

Same-store sales - those in outlets open at least a year - were down 11%, despite the fact that the key back-to-school period started at the beginning of July.

In the same period, Wal-Mart's sales rose 3.8%.

"Very, very little of our same-store sales declines this last month was owing to actual out-of-stocks," said Julian Day, the company's president and chief operating officer.

"A significant amount may have been related to perceptions that may have grown out of our performance after bankruptcy."