Sears Expects Quarterly Profit to Beat Forecast

Sears, Roebuck & Co. said Tuesday that its fourth-quarter profit will beat forecasts by about 20%, a sign that Chairman Arthur Martinez’s strategy to revive the second-biggest U.S. retailer may work.

Shares in Sears rose $1.50 to close at $31.56 on the New York Stock Exchange.

Martinez last year cut prices on basic clothing such as T-shirts, brought in new managers, and dumped the old “Softer Side of Sears” campaign to try to pull sales out of a two-year slump.

Sales have surged three of the last four months. Sears’ stock, however, trades at half its 1998 high as investors wait to see if it can keep winning back shoppers lost to discounters and trendier apparel chains.

Fewer promotions, higher-than-expected Internet sales and an improved credit-card business will lift profit by a “high-teen to low-twenty percentage rate” from last year’s $1.48 a share, Sears said. Analysts had projected a 1% rise to $1.50 a share, according to earnings tracker First Call/Thomson Financial.

Until recently, Sears had stagnated even as most of its rivals were enjoying brisk sales. Its sales at stores open at least a year rose an average of just 0.4% from September 1998 to September 1999, lagging the 6.4% gain for the Bloomberg sales index of about 30 chains.

Same-store sales at Sears began to pick up in September, rising 4.1%, followed by gains of 4.7% in October and 5.9% in November. Sales slipped 0.6% in December, but Sears made more money on each purchase because it offered fewer steep discounts than last year.

To help boost sales, Sears pared prices last year on 15% to 20% of its apparel lines. In September, the company started a new ad campaign with the slogan “The Good Life at a Great Price. Guaranteed.”

At its credit division, Sears bolstered collection efforts and became more selective in issuing credit cards. Sears is based in the Chicago suburb of Hoffman Estates. It operates more than 850 department stores; 2,100 hardware, auto and other specialty shops; and a Web site, https://www.sears.com. It trails only Wal-Mart in sales, and it ranks as the largest U.S. department-store chain.