Sears Holdings Corp (NYSE: SHLD) stock skyrocketed more than 21 percent Thursday after the company reported third-quarter earnings that beat rock-bottom market expectations. Nevertheless, Sears gave investors little reason for optimism that the company’s long-term picture is anything but bleak.
Sears reported a net earnings-per-share loss, excluding one-time items, of $2.64 on revenue of $3.7 billion. Both numbers topped consensus analyst estimates of a $4.46 per-share loss on $3.3 billion in revenue.
Despite aggressive efforts to shutter its least profitable Sears and Kmart locations, same-store sales tumbled 15.3 percent in the third quarter compared to an 11.5 percent decline in the second quarter. Total revenue for the quarter was down 26 percent compared to a year ago.
Sears has closed 330 stores this year and plans to close another 100 stores in the fourth quarter. Aggressive cost-cutting and property sales led to only a $558 million net loss in the third quarter compared to a $748 million net loss in the same quarter a year ago.
In the earnings release, CEO Eddie Lampert says the company is making progress in its turnaround efforts.
“With the challenging retail landscape continuing to pressure sales, the improvement in adjusted EBITDA [earning before interest, taxes, depreciation and amortization] is reflective of the success of the strategic priorities we outlined earlier this year to streamline our operations, reduce inventory and minimize operating expenses,” Lampert says.
Lampert, who currently owns about 54 percent of Sears via his hedge fund ESL Investments, once again loaned the company $100 million in October to help it get through the critical holiday shopping season. The new loan came with an interest rate of 11 percent, and the New York Post estimates ESL has now pocketed more than $1 billion in profits from its Sears investments.
As of Oct. 28, Sears had used about $805 million of its $1.5 billion revolving credit facility.
“I don’t see how Sears pulls out of the tailspin,” CNBC analyst Jim Cramer said of the stock last month. “It’s not for me.”
Despite Thursday morning’s big relief rally, Sears has lost…
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