Sears Holdings reported its first quarterly profit in nearly two years, helped by the retailer's $1.25 billion cost-cutting plan, amid doubts about its ability to continue as a going concern.
Continue Reading Below
The company's shares were up 7 percent in light premarket trading on Thursday.
However, sales continued its years-long decline, hurt by lower demand for groceries, apparel and home appliances at Sears and Kmart stores.
Sears, once the largest U.S. retailer, has been struggling to adjust to the changing retail landscape and rising competition from Wal-Mart Stores Inc, Target Corp and Amazon.com Inc.
The company said in April it expected a net profit of between $185 million and $285 million for the first quarter, through a cost-cutting plan, which included store closures and cutting management jobs.
Sales at Sears' U.S. stores open more than a year fell 12.4 percent, while at Kmart it fell 11.2 percent in the first quarter ended April 29.
Net income attributable to Sears' shareholders was $244 million, or $2.28 per share, compared with a loss of $471 million, or $4.41 per share, a year earlier.
The company's profit in the quarter was boosted by sale of Craftsman tools brand to Stanley Black & Decker Inc in March for an upfront payment of $525 million.
Excluding such one-time items, the company reported a net loss of $2.15 per share.
Revenue fell 20.3 percent to $4.30 billion.
Sears, which has been closing stores and divesting businesses for years to cope with falling sales and a growing debt pile, warned in March about its ability to continue as a going concern.
Sears' shares were up at $8.00 in premarket trading. Up to Wednesday's close, the stock had fallen 18 percent since the retailer raised going concern doubts.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Savio D'Souza and Arun Koyyur)