The grocery chain was hit by costs associated with filing for bankruptcy protection and an 8.4% drop in sales.

Kmart filed for protection from its creditors under Chapter 11 of the US bankruptcy laws on 22 January.

Since then it has struggled to attract customers to its stores, with shoppers concerned about the company's viability and the fact that sale merchandise as promoted in adverts was often not available.

Significant losses

Kmart plans a "welcome back" sale in early June, which it will announce in letters mailed to shoppers' homes.

James B. Adamson, Kmart chairman and chief executive, said on Friday that the losses were significant, but said the company is making progress, particularly in addressing in-stock levels and customer service.

Net sales for the quarter were $7.64 billion, down from $8.34bn in 2001.

Sales at stores open at least a year fell 8.8% compared with the first quarter of 2001. The same-store sales decline was 11.7%, excluding the 283 stores that were closed this year.