Sears posts surprise profit, but still not out of the woods

Sears Holdings (SHLD) managed to earn a surprise profit in the first quarter, boosting its shares in after-hours trading by 22.3 percent to $61.40. Does this mean that the economy has recovered? Not unless you think a 9 percent plunge in sales is a sign of recovery.

Here are the highlights of Sears' results. It claimed to have reversed a year-ago loss and earned $26 million in the first quarter -- or 21 cents per share. Last year, Sears lost $56 million in the first quarter, or 43 cents per share. Still, Sears is not out of the woods yet since its sales fell more than 9 percent to $10.06 billion in the quarter.

This is way better than analysts had anticipated -- analysts surveyed by FactSet Research estimated a quarterly loss for Sears Holdings of 88 cents a share on revenue of $10.06 billion. The analysts were right on the revenues but way too pessimistic on the loss. It may be short-covering driving up Sears shares.

Unless Sears' revenues rise, we are still in the woods.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book isYou Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.

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