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    Kmart's Economic Outlook Grim

    Discount chain's stock plunges after analyst warns bankruptcy may be looming.


    NEW YORK -- Shares of Kmart Corp. fell more than 15 percent on Wednesday to their lowest point in two decades after a Wall Street analyst suggested the discount retail chain might face bankruptcy and recommended investors sell the stock.

    Prudential Securities analyst Wayne Hood also lowered his rating for the company to "sell" from "hold" and cut earnings per share estimates for the fourth quarter as well as fiscal 2001 and 2002, citing disappointing fourth-quarter sales and earnings.

    Hood also told Reuters that he "would not be surprised if the company were to file Chapter 11 bankruptcy if trends do not improve."

    Kmart responded to Hood's comments, saying it has sufficient funds and available lines of credit to continue to carry out its strategies. The company's stock dropped 86 cents to $4.60 on the New York Stock Exchange.

    Kmart reported holiday sales last week at the low end of its sales growth target of nil to two percent. Rival Wal-Mart Stores Inc. said its same-store sales for December are expected to come in at the high end of its forecast for growth of 4 percent to 6 percent, the report said.

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