Kmart Reports Significant Progress in First Week of Reorganization

              Company Receives Approval for First-Day Orders
              That Support Employees, Customers and Vendors

          Numerous Key Vendors Resume Shipments on Normal Terms

TROY, Mich., Jan. 29 /PRNewswire-FirstCall/ -- Kmart Corporation (NYSE: KM) today reported that it has made significant progress in its reorganization in the past week, including finalizing and receiving interim court approval for a $2 billion debtor-in-possession credit facility, receiving court approval to continue providing wages and benefits to associates, and receiving assurances from many of its key vendors that they are resuming merchandise shipments under normal terms. The Company also noted that it has received strong support from customers and the communities it serves across the nation.

Charles C. Conaway, Kmart Chief Executive Officer, said, "Although it is just the beginning of what will be a long road for Kmart, we accomplished a great deal during the first week of our reorganization. We are pleased with the prompt approval by the court of our 'first day motions,' which, taken together, will enable the Company to operate without interruption and meet normal business obligations. Moreover, the commitments we have received from the vendor community have allowed us to remain focused on serving customers, a top priority during the restructuring process."

Conaway continued, "We are extremely grateful for the overwhelming support we've received in the past week from customers, our vendor partners and associates. Judging from the calls, emails and letters we've been receiving, it is clear that there are a lot of people who love Kmart and are willing to go the extra mile to help make sure we come through this process a stronger and healthier company."

On Tuesday, January 22, 2002, Kmart and 37 of its U.S. subsidiaries filed voluntary petitions for reorganization under chapter 11 of the U.S. Bankruptcy Code. Later that day, the U.S. Bankruptcy Court for the Northern District of Illinois approved "first day motions" that are intended to support the Company's employees, customers and vendors, and provide other forms of operational and financial stability as Kmart proceeds with its reorganization.

The first day court orders include several that allow the Company to provide ongoing support to its associates, including payment of pre-petition and post-petition wages, salaries, incentive plans, medical, disability, severance, vacation and other benefits.

The court also granted interim approval for $1.15 billion of a new $2 billion debtor-in-possession (DIP) credit facility, which allows the Company to continue operations, pay employees and purchase goods and services. Kmart has since finalized its agreement with the bank group providing the DIP facility, and hearing for final approval of the full facility is scheduled for March 6. The DIP credit facility is being provided by a group of banks led by JPMorgan Chase Bank, Fleet Retail Finance Inc., General Electric Capital Corporation and Credit Suisse First Boston.

Following the court's interim approval of the DIP facility, Kmart has received notification from a significant number of key vendors that they have resumed shipments to the company on normal terms, and many others have indicated that they intend to do so shortly. To support the resumption of normal trade terms, Kmart sought and has received permission from its bank group to provide a second lien on the company's assets to those vendors who resume normal terms with the company within the first 60 days of the reorganization.

The court also gave its authority to allow Kmart to reject unexpired real property leases and approved procedures for rejecting other unexpired leases, covering a total of approximately 350 previously closed locations. This initiative will result in annual cost savings of approximately $250 million when completed.

More information about Kmart's reorganization case is available at the following toll-free numbers: Associates - (877) 638-8856; Customers - (877) 475-6278; Vendors and Suppliers - (877) 453-5693. The case has been assigned to the Honorable Chief Judge Susan Pierson Sonderby under case number 02B-02474. Additional information on the case can be obtained via the Internet at .

Kmart Corporation is a $37 billion company that serves America with more than 2,100 Kmart and Kmart SuperCenter retail outlets and through its e- commerce shopping site, .

Safe Harbor Statement

The foregoing, as well as other statements made by Kmart, may contain forward-looking statements regarding Kmart. They reflect, when made, the Company's current views with respect to current events and financial performance, and are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company's operations and business environment which may cause the actual results of the Company to be materially different from any future results, express or implied, by such forward-looking statements. The Company intends that such forward-looking statements be subject to the Safe Harbor created by Section 27(a) of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. The words and phrases "expect," "estimate," "anticipate" and similar expressions identify forward-looking statements. Certain factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of the Company to continue as a going concern; the ability of the Company to operate pursuant to the terms of the DIP facility; court approval of the Company's first day papers and other motions prosecuted by it from time to time; the ability of the Company to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the chapter 11 cases; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for the Company to propose and confirm one or more plans of reorganization, for the appointment of a chapter 11 trustee or to convert the cases to chapter 7 cases; the ability of the Company to obtain trade credit, and shipments and terms with vendors and service providers for current orders; the Company's ability to maintain contracts that are critical to its operations; potential adverse developments with respect to the Company's liquidity or results of operations; the ability to fund and execute its business plan; the ability to attract, retain and compensate key executives and associates; and the ability of the Company to attract and retain customers. Other risk factors are listed from time to time in the Company's SEC reports, including, but not limited to the quarterly report on Form 10-Q for the quarter ended November 27, 2001. Kmart disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


SOURCE: Kmart Corporation

Contact: Kmart Media Relations, +1-248-463-1021, Kmart Investor
Relations, +1-248-463-1040


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