Sears forecasts 28% jump in profit

Sears Holdings Corp., the largest U.S. department-store company, forecast Wednesday that fiscal fourth-quarter profit would rise as much as 28%, beating analysts’ estimates.

Earnings will climb to $4.87 to $5.39 a share in the period ending Feb. 3, Hoffman Estates, Ill.-based Sears said.

Net income of as much as $830 million will be helped by a $20-million pretax gain as property sales more than offset investment losses, the company said. Chairman Edward Lampert, the hedge fund manager who merged Kmart Holding Corp. and Sears, Roebuck & Co., has begun putting the company’s surplus cash into investments outside of retailing. He has said he may buy other companies.

“They could be getting ready for another acquisition,” Arun Daniel, a senior analyst at ING Investments, said.

Sears’ cash is projected to total $3.5 billion at this quarter’s end. In the year-earlier fourth quarter, Sears reported profit of $648 million, or $4.03 a share.

Its stock rose $5.86, or 3.5%, to $172.09. It was the biggest increase since September. It gained 45% last year.

Same-store sales dropped 5.6% during November and December at Sears locations on declining demand for lawn and garden products and appliances, the company said. Clothing, which had dragged down sales in previous quarters, improved.

At Kmart, comparable-store sales fell 1.2%. Apparel purchases, although hurt by warm weather, rose from a year earlier.

Same-store sales have declined every quarter since Kmart combined with Sears in 2005.