store sales. While Kmart's same-store sales declined as a result of lower transaction volumes, the company said the decline has lessened and several businesses, including apparel, had positive same-store sales during the quarter. Gross margin improved to 26.7 percent from 24.1 percent last year, due primarily to the inclusion of Sears, which had a higher overall gross margin rate than Kmart in the current-year quarter. Kmart's gross margin rate was helped in the latest quarter by lower vendor costs and an increase in sales within the more profitable apparel product lines, but was hurt by increased promotional markdowns. Sears Holdings said about 20 Sears and Kmart stores and facilities located in Louisiana and Mississippi were damaged by Hurricane Katrina. The company expects the majority of any losses to be covered by insurance.
