Sears gains on preliminary first-quarter profit
Sears Holdings Corp. rose the most in more than two months after saying first-quarter profit excluding some items was as much as $195 million after selling stores in the U.S. and Canada, compared with a loss a year earlier.
The shares rose 22 percent to $65.50 at 12:20 p.m. in New York after climbing as high as $65.70 for the biggest intraday increase since Feb. 23. Hoffman Estates, Illinois-based Sears gained 69 percent this year before today.
Profit from continuing operations attributable to shareholders was $155 million to $195 million in the period ended April 28, Sears said in a preliminary earnings statement. That includes a gain of about $235 million from selling the stores. Sears's loss on that basis a year earlier was $165 million.
The operator of namesake and Kmart stores posted a $3.14 billion net loss last year as shoppers bought fewer electronics and hardware. While same-store sales fell 1 percent at Sears's domestic locations in the first quarter, that “doesn't sound too bad” as sales of appliances and tools remain challenging, said Paul Swinand, an analyst at Morningstar Inc. in Chicago.
“The fact that they didn't have another abysmal first quarter is really good news,” Swinand, who has the equivalent of a weak hold rating on Sears, said in a telephone interview. “It's an ‘It feels so good when I stop banging my head against the wall' kind of thing.”
First-quarter earnings per share from continuing operations were about $1.46 to $1.84, compared with a loss of $1.53 last year, the company said.
New Management
Sears is spinning off about 1,250 smaller-format stores and selling some locations to raise cash after reporting the largest loss in its history as a combined company last year.
The retailer also has been revamping its management team, naming former Brookstone Inc. executive Ron Boire as chief merchandising officer and hiring David Lukes, who most recently led Mall Properties Inc., in the newly created position of president of real estate development. Chief Executive Officer Lou D'Ambrosio was hired in February 2011.
“Hopefully, this is an indication that now that they have the team in place, the CEO in place, they can make quicker decisions and get the inventory they need to move out, out,” Swinand said.
Domestic comparable store sales including Kmart fell 1.3 percent in the quarter ended as consumer-electronics and appliance purchases decreased, Sears said.
The retailer said yesterday it plans to spin off its Hometown and Outlet stores in the third quarter, possibly giving Chairman Edward Lampert an opportunity to hold a larger stake in the new publicly traded company.
The business will trade on the Nasdaq Stock Market with the ticker symbol “SHOS,” Sears said yesterday in a filing with the U.S. Securities and Exchange Commission.