Sears Holdings shares up 20%, Q1 Profit Surprise

Sears Holdings

Sears Holdings (NASDAQ:SHLD) posted a surprise fiscal Q1 profit on the back of cost cuts and tighter inventory controls in the face of a weak market.

After the Thursday close, Sears /quotes/comstock/15*!shld/quotes/nls/shld  (SHLD  57.91, +7.72, +15.38%) said that it earned $26 million, or 21 cents a share, a turn from the $56 million, or 43 cents a share, it lost in the first quarter of 2008. That even as revenue slipped 9% to $10.06 billion from $11.07 billion a year earlier.

Excluding one-time items, Sears would have earned $128 million, or 38 cents a share, in the quarter, vs. an $8 million loss in the year ago period.

The average estimate of analysts polled by FactSet Research had been for Sears to lose 88 cents a share on $10.06 billion in sales.

Shares were up $9.93 at $60.12 out of the open.

The company's same-store sales -- those at outlets open at least a year -- were down 7.4% with Sears-branded domestic stores seeing the biggest decline, at 11%. Particularly hit were appliances, tools and garden items.

Sales at its Kmart stores, meanwhile, were off 2.1% from a year ago as demand for home electronics helped offset some weakness in apparel sales.

And tighter inventory management reduced the value of its unsold merchandise to $9.5 billion from $10.3 billion, the company said.

Sears also announced that it has amended and extended its credit facility to provide $4.1 billion in financing through March 24, 2010, and $2.4 billion from March 25, 2010, through June 2012.

Further, the company said it whittled down its debt load to $3 billion by the end of the first quarter from $3.5 billion a year earlier.

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