Sears Shares Leap on Strong Profit News

Sears, Roebuck & Co. said earnings will beat forecasts for the first quarter and for the full year, sending its shares on their biggest one-day rise in at least two decades. Chairman Arthur Martinez has cut prices on basic clothes such as T-shirts, added shopping carts and brought out new ads to woo shoppers from lower-priced and trendier rivals. Sales, which had slumped for two years, have picked up the last seven months. The retailer said sales at stores open at least a year increased 3.8% in March, beating analysts’ forecasts of 1% to 3%. Sales were led by home appliances and home improvement items. Sales rose 3.1% in February and 1.7% in January. Sears said it expects first-quarter earnings of 62 cents to 67 cents a share, lifted by higher sales in the U.S. and Canada as well as improvements in its credit card division, where it has bolstered collection efforts and become more selective in issuing credit cards. For the first quarter, analysts were expecting 46 cents on average, according to First Call/Thomson Financial, up from 38 cents a year ago. For the year, Sears expects earnings to increase in a low- to mid-teen percentage rate, up from its earlier estimate of about 10%. This is the second quarter in a row Sears has said earnings will beat forecasts. Sears’s stock jumped $7 to close at $37.50 on the New York Stock Exchange.