Kmart Corporation Conducting Internal Investigation; Cooperating with Securities and Exchange Commission

Kmart Corporation (NYSE: KM) today stated that it has received an anonymous letter expressing concern regarding unspecified accounting matters. The letter, which was addressed to the Securities & Exchange Commission (SEC), the Company's auditors and Board of Directors, purports to come from employees of the Company. The letter has been referred to the Audit Committee of the Board of Directors, which promptly engaged outside counsel and accounting consultants to conduct an independent investigation. Upon receipt of the letter, the Company also contacted the SEC, which has subsequently authorized a private investigation. Kmart Corporation advised the SEC of the independent investigation in progress and that the Company intends to cooperate fully with the SEC.

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, http://www.bluelight.com/ .

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.

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SOURCE: Kmart Corporation

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

Website: http://www.bluelight.com/








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