- Tom Silva
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Sears Profit Soaring
In another sign that recessions are good for low-cost leaders, Sears posted a $26 million profit – or 21 cents per share — in the first quarter of 2009. Based on that news, shares rose $5.21, or 10.38 percent, to close at $55.40 on the Friday before Memorial Day. These numbers represent a significant improvement over the same time period of 2008, when the venerable Chicago retailer lost $56 million, or 43 cents per share.
Before subtracting one-time items, Sears earned $47 million for the first quarter, or 38 cents per share. According to analysts, that is a far better performance than the forecasted 88 cents per share loss.
In other Sears’ news, the firm inked a deal with its banks to extend its line of credit for two years – which was set to expire March 24, 2010. By amending the facility, Sears now can provide $4.1 billion in financing through that date, and an additional $2.4 billion for 27 months after that. This move gives Sears “more than adequate liquidity for standby letters of credit and working capital needs,” according to corporate sources. The new terms give Sears the ability to use existing collateral to borrow up to $1 billion.