Tax Reform Boosts Sears to Profit, But Sales Continue to Plummet

Sears Holdings Co. jumped 17 percent in late trading after the U.S. tax overhaul helped the ailing retailer post a rare quarterly profit. Net income amounted to $182 million in the fourth quarter, compared with a $607 million loss a year earlier, Sears said on Wednesday. The company got a roughly $470 million boost from the federal tax changes, which slashed corporate rates. However, the company's same-store sales declined almost 16 percent last quarter, a sign the company didn’t benefit from a generally positive holiday season.

Total Retail's Take: Unfortunately, this appears to be more of an one-time occurrence thanks to the cash windfall U.S. corporations are seeing in their fourth-quarter earnings than a sign that Sears is getting its business back on track. Following a disappointing holiday season, Sears announced further store closures this year, and its sales have been on a steep decline for some time now. With this week's news that Toys"R"Us would be closing all of its U.S. stores, one has to wonder if Sears (and Kmart) is the next domino to fall.