TROY, Mich., March 24, 2003 -- Kmart Corporation (Pink Sheets: KMRTQ) today announced its financial results for the fiscal year and fourth quarter ended January 29, 2003. These results were filed with the Securities and Exchange Commission in an Annual Report on Form 10-K. Kmart has also filed monthly operating reports for January and February 2003 with the United States Bankruptcy Court for the Northern District of Illinois and with the SEC on Form 8-K.

Fiscal 2002 Results

For the 52 weeks ended January 29, 2003, Kmart reported total sales of $30.76 billion, compared with $36.15 billion in fiscal 2001. As previously reported, Kmart closed 283 underperforming stores, or 13% of its existing store base, in the second quarter of 2002. On a same-store basis, sales declined 10.1% in fiscal 2002 from the previous year.

Kmart reported a net loss of $3.22 billion, or $6.36 per share, in fiscal 2002, versus a loss of $2.45 billion, or $4.95 per share during fiscal year 2001. Excluding non-comparable items such as special charges, reorganization items and results of discontinued operations, the Company’s net loss in fiscal 2002 was $846 million, or $1.67 per share, versus a net loss of $1.54 billion, or $3.12 per share, in the 2001 fiscal year.

Special charges affecting fiscal 2002 results consisted primarily of charges relating to the closure of 283 stores in the second quarter, charges recorded in the fourth quarter related to the announced closure of an additional 316 stores in 2003, asset impairments and corporate cost reduction initiatives. Special charges affecting fiscal 2001 results consisted of charges related to asset impairments and the restructuring of the Company’s supply chain operations and e-commerce business. See the Supplemental Schedule included within this press release, which provides a reconciliation of net loss, as reported to net loss, as adjusted.

Julian C. Day, President and Chief Executive Officer of Kmart, said: “In addition to the Company’s Chapter 11 filing in January of last year, Kmart’s 2002 financial results reflect the impact of significant charges associated with our restructuring efforts as well as a decrease in sales associated with the store closings and reduced customer traffic.”

Day continued, “As we draw closer to emergence from Chapter 11, we remain focused on achieving a cost structure and organization that is aligned with our reduced store base. Our objective is to ensure that the Company emerges from the reorganization process with a restructured balance sheet, stronger store portfolio, and an efficient, cost-effective organization positioned to compete in the discount retail sector. Our fast-track reorganization timetable remains on schedule, as we expect to emerge from Chapter 11 on or before April 30, 2003. Creditors are in the process of voting on our First Amended Joint Plan of Reorganization, and we anticipate the Plan will be confirmed in mid-April and the Company will complete its Chapter 11 reorganization by April 30, 2003.”

February 2003 Results

In its monthly operating report for the four-week period ended February 26, 2003, the first month of the 2003 fiscal year, Kmart reported a net loss of $54 million on sales of $2.17 billion. Same-store sales declined 2.5% compared to February 2002. Inventory clearance sales at the 316 closing stores are not included in the same store sales results. Total sales, which include the closing stores, decreased by 1.3%.

As of February 26, 2003, the Company’s balance sheet cash position was slightly more than $1 billion, of which approximately $260 million represented cash at stores. In addition, Kmart had no borrowings outstanding as of February 26, 2003 under its debtor-in-possession (DIP) facility and had borrowing availability under its DIP facility of approximately $1.55 billion.

Day said, “We have adopted a disciplined, low-risk approach to managing our business. Although this Company has a long way to go, we are encouraged by February’s financial results, which demonstrate signs of progress, particularly in achieving positive cash flow, controlling costs and enhancing gross margin. As we continue to control costs and improve margins moving forward, we remain focused on driving same-store sales increasing customer traffic, enhancing our in-stock positions and improving overall customer experience.”

Fourth Quarter and January 2003 Results

Net sales for the fourth quarter of 2002 were $8.87 billion, compared with $10.88 billion in the 2001 fourth quarter. On a same-store basis, which excludes the 283 stores closed in the second quarter of 2002, sales declined 9.8% from the fourth quarter of 2001.

Kmart reported a net loss of $1.10 billion, or $2.13 per share, in the fourth quarter of 2002, compared with a net loss of $1.65 billion, or $3.31 per share, in the same quarter a year ago.

In its monthly operating report for the four-week period ended January 29, 2003, the final month of the 2002 fourth quarter and fiscal year, Kmart reported a net loss of $1.41 billion on net sales of $1.70 billion. The net loss for the month includes several charges relating to the Company’s previously announced plan to close 316 stores in early 2003. These include a non-cash charge of $695 million relating to the impairment of long-lived assets at the closing stores and a charge of $471 million related to the write-down of inventory to its estimated selling value in connection with the liquidation sales at the closing stores. In addition, Kmart recorded a charge of $36 million related to the planned reduction of staff at the Company’s headquarters and in certain corporate support functions. Same store sales in January were 8.9% lower than the same period last year.

The following unaudited table provides a reconciliation of net loss as reported to net loss, as adjusted for special charges, reorganization items and discontinued operations for the 52 weeks ended January 29, 2003 and January 30, 2002.

Kmart Corporation is a mass merchandising company that serves America through its Kmart and Kmart SuperCenter retail outlets. The Company’s common stock is currently quoted on the Pink Sheets Electronic Quotation Service (www.pinksheets.com) under the symbol KMRTQ.

Cautionary Statement Regarding Forward-Looking Information

Bankruptcy law does not permit solicitation of acceptances of the Plan of Reorganization until the Court approves the applicable Disclosure Statement relating to the Plan of Reorganization as providing adequate information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of the holder of claims or interests of the relevant class to make an informed judgment about the Plan of Reorganization. On February 25, 2003, the Bankruptcy Court approved the Company's Disclosure Statement with respect to the First Amended Joint Plan of Reorganization and authorized a balloting and solicitation process that will conclude on April 4, 2003. A hearing on confirmation of the First Amended Joint Plan of Reorganization is scheduled to commence in the Bankruptcy Court on April 14, 2003. Accordingly, this announcement is not intended to be, nor should it be construed as, a solicitation for a vote on the Plan, which can only occur based on the official disclosure statement package that was mailed on or about March 7, 2003. The Company will emerge from Chapter 11 if and when the Plan receives the requisite creditor approvals and is confirmed by the Bankruptcy Court.

Statements made by Kmart which address activities, events or developments that we expect or anticipate may occur in the future, including certain of the information contained in the Plan of Reorganization and Disclosure Statement, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company's current views with respect to current and future events and financial performance. Such forward-looking statements are and will be, as the case may be, subject to many risks and uncertainties, including, but not limited to, Kmart's having filed for bankruptcy and factors relating to Kmart's operations and the business environment in which Kmart operates, which may cause the actual results of Kmart to be materially different from any future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include those set forth in Kmart's Annual Report on Form 10-K for the fiscal year ended January 29, 2003, or in other filings made, from time to time, by Kmart with the Securities and Exchange Commission (the "Company Filings"). The forward-looking statements speak only as of the date when made and Kmart does not undertake to update such statements.

Similarly, these and other factors set forth in the Company Filings, including the terms of the final reorganization plan ultimately confirmed by the Bankruptcy Court, can affect the value of the Company’s various pre-petition liabilities, common stock and/or other securities. Until Kmart's plan of reorganization is confirmed by the Bankruptcy Court, the recoveries of pre-petition claims holders are subject to change.

If the final plan of reorganization confirmed by the Bankruptcy Court is consistent with the plan of reorganization recently filed with the Court, it would result in the cancellation of the existing Kmart common stock, with holders thereof receiving no distributions under the plan other than, possibly, for a minor interest in a creditor litigation trust to be established pursuant to the plan. In light of the foregoing, the Company considers the value of the common stock to be highly speculative and cautions equity holders that the stock may ultimately be determined to have no value.

Accordingly, the Company urges that appropriate caution be exercised with respect to existing and future investments in Kmart common stock or any claims relating to pre-petition liabilities and/or other Kmart securities.