November 13, 1997

Robert M. Burton
Divisional Vice President, Investor Relations
(248) 643-1040

Shawn M. Kahle
Vice President, Corporate Affairs
(248) 637-4201

KMART CORPORATION REPORTS 1997 THIRD-QUARTER RESULTS

TROY, Mich., November 13, 1997 -- Kmart Corporation (NYSE: KM) today reported net income from continuing operations of $18 million, or $0.04 per share, in the third quarter of 1997, compared with net income from continuing operations in the third quarter of 1996 of $8 million, or $0.02 per share.

Total sales in the third quarter were $7.315 billion, an increase of 1.4% from $7.212 billion from the third quarter of 1996. On a comparable store basis, consolidated sales for the quarter increased 4.7%.

Gross margin for the third quarter of 1997 was 22.3% of sales versus 23.3% last year.

Selling, general and administrative (SG&A) expenses declined by $41 million for the quarter, resulting in an expense ratio for the third quarter of 20.4% of sales versus 21.3% for the comparable 1996 period. The pretax LIFO credit for the 1997 period was $4 million, compared with a credit of $4 million for the 1996 third quarter. For the 39 week period, the pretax LIFO charge was $7 million in 1997 and 1996.

"With these results, Kmart Corporation has reported its sixth consecutive quarterly earnings increase,” said Floyd Hall, chairman, president and chief executive officer. “Sales in U.S. Kmart stores were on plan for the third quarter of 1997 due to strong performance in the consumables category. However, gross margin was below plan as unseasonably warm weather resulted in lower apparel volumes, together with a higher level of promotional sales and increased distribution costs. Selling, general and administrative expense ratios improved by 90 basis points in the quarter, continuing our favorable trend of the first two quarters. Interest expense was also favorable, reflecting lower levels of debt and improved borrowing spreads. Kmart enters the fourth quarter with a conservative inventory position in anticipation of a solid holiday season.”

On a continuing basis, the first nine months of 1997 resulted in earnings of $--63 million, or $0.13 per share, as compared with a loss from continuing operations of $5 million, or $0.01 per share for the first nine months of 1996. The net loss, including discontinued operations, for the nine months of 1996 was $56 million, or $0.12 per share. Discontinued operations in 1996 included income from Builders Square of $10 million or $0.02 per share and a $61 million charge, or $0.13 per share, resulting from participation in the initial public offering of Thrifty PayLess Holdings, Inc. and the revaluation of the Company’s remaining investment at that time.

Kmart Corporation serves America with 2,121 Kmart, Big Kmart, and Super Kmart retail outlets. Kmart Corporation common stock is listed on the New York, Pacific, and Chicago Stock Exchanges.

KMART CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

39 WEEKS ENDED OCTOBER 29, 1997 AND OCTOBER 30, 1996

(Amounts in millions, except per share data)

10-29-97

10-30-96

Sales

$ 7,315

$ 7,212

Cost of sales, buying and occupancy

5,683

5,528

Gross margin

1,632

1,684

Selling, general and administrative expenses

1,492

1,533

Continuing income before interest, income taxes and dividends on convertible preferred securities

140

151

Interest expense, net

96

119

Income tax provision

13

11

Dividends on convertible preferred securities, net of income taxes

13

13

Net income from continuing retail operations

18

8

Income from discontinued operations, net of taxes

-

1

Net income

$     18

$     9

Earnings per common share:

Net income

$  0.04

$  0.02

Weighted average shares outstanding

493.9

486.9

The consolidated statement of operations for the prior period has been restated for discontinued operations.

KMART CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

39 WEEKS ENDED OCTOBER 29, 1997 AND OCTOBER 30, 1996

(Amounts in millions, except per share data)	10-29-97	10-30-96

Sales	$ 22,424	$ 21,753
Cost of sales, buying and occupancy	17,517	16,801
Gross margin	4,907	4,952
Selling, general and administrative expenses	4,480	4,591
Continuing income before interest, income taxes and dividends on convertible preferred securities	427	361
Interest expense, net	286	339
Income tax provision	41	8
Dividends on convertible preferred securities, net of income taxes	37	19
Net income (loss) from continuing retail operations	63	(5)

Income from discontinued operations, net of taxes	-	10
Loss on disposal of discontinued operations, net of taxes	-	(61)
Net income (loss)	$ 63	$ (56)

Earnings (loss) per common share:
Continuing operations	$ 0.13	$ (0.01)
Income from discontinued operations	-	0.02
Loss on disposal of discontinued operations	-	(0.13)
Net income (loss)	$ 0.13	$ (0.12)

Weighted average shares outstanding	492.4	485.6

The consolidated statement of operations for the prior period has been restated for discontinued operations.

KMART CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

39 WEEKS ENDED OCTOBER 29, 1997 AND OCTOBER 30, 1996

(Amounts in millions)	10-29-97	10-30-96

Cash Flows From Operating Activities:
Net income (loss) from continuing retail operations	$ 63	$ (5)
Adjustments to reconcile net income (loss) to net cash used for operating activities:
Depreciation and amortization	496	487
Deferred income taxes and taxes payable	25	155
Undistributed equity income and dividends received	14	42
Decrease in other long-term liabilities	(46)	(215)
Increase in inventories	(1,439)	(2,030)
Increase in accounts payable	911	1,050
Increase in accounts receivable	(210)	(184)
Changes in certain assets and liabilities	31	84
Net cash used for continuing operations	(155)	(616)
Discontinued operations	2	59
Net cash used for operating activities	(153)	(557)

Cash Flows From Investing Activities:
Capital expenditures	(489)	(192)
Decrease (increase) in property held for sale	123	(583)
Proceeds from real estate financings and other	290	5
Proceeds from divestitures, net	145	177
Decrease in minority interest	(55)	(2)
Increase in notes receivable	(72)	-
Other, net	2	16
Net cash used for investing activities	(56)	(579)

Cash Flows From Financing Activities:
Proceeds from long-term debt and notes payable	916	2,013
Refinancing costs related to long-term debt and notes payable	(15)	(196)
Payments on long-term debt and notes payable	(770)	(2,225)
Net proceeds from issuance of convertible preferred securities	-	971
Payments on capital lease obligations	(85)	(85)
Other, net	37	34
Net cash provided by financing activities	83	512

Net change in cash and equivalents	(126)	(624)
Cash and equivalents at beginning of year	406	1,083
Cash and equivalents at end of period	$ 280	$ 459

The consolidated cash flow statement for the prior period has been restated for discontinued operations.

KMART CORPORATION

CONSOLIDATED BALANCE SHEETS

(Amounts in millions)	10-29-97	10-30-96	1-29-97
ASSETS
Current Assets:
Cash and equivalents	$ 280	$ 459	$ 406
Merchandise inventories	7,793	8,050	6,354
Other current assets	1,111	1,268	973
Net current assets of discontinued operations	-	720	-
Total current assets	9,184	10,497	7,733

Property and equipment, net	5,442	4,972	5,740
Property held for resale	241	882	200
Other assets and deferred charges	264	444	613
TOTAL ASSETS	$ 15,131	$ 16,795	$ 14,286

LIABILITIES AND EQUITY
Current Liabilities:
Long-term debt due within one year	$ 76	$ 155	$ 156
Trade accounts payable	2,920	2,841	2,009
Accrued payrolls and other liabilities	1,017	1,078	1,298
Taxes other than income taxes	250	234	139
Total current liabilities	4,263	4,308	3,602

Long-term debt and notes payable	2,347	3,564	2,121
Capital lease obligations	1,362	1,505	1,478
Other long-term liabilities	921	1,013	1,013
Net long-term liabilities of discontinued operations	-	126	-
Convertible preferred securities, net	979	980	980
Common stock	489	487	486
Capital in excess of par value	1,630	1,610	1,608
Retained earnings	3,168	3,270	3,105
Unrealized gain on investments	-	45	-
Treasury shares and restricted stock	(25)	(45)	(37)
Foreign currency translation adjustment	(3)	(68)	(70)
TOTAL LIABILITIES AND EQUITY	$ 15,131	$ 16,795	$ 14,286

The consolidated balance sheet for the prior period has been restated for discontinued operations.