Sears Pulls Off Modest Rebound as Market Clings to Rare Bright Spots

 | Sep 14, 2018 | 4:14 PM EDT
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Sears Holdings Corporation's (SHLD)  gained 3.3% after jumping over 20% in pre-market trading, as investors cheered some of the rare bright spots for the troubled retailer.

Sears share prices rose to $1.25 per share after market close. The stock hasn't recovered since it slipped below $2 in July.

As the beleaguered company is often referred to as a "zombie retailer" and Jim Cramer has labeled the company's results "pathetic", the jump was difficult to explain.

The market welcomed the company's most recent sales figures as they suggested a glimpse of the turnaround promised by CEO Eddie Lampert.

"While we have yet to achieve our goal of returning the company to profitability, I'd like to highlight that we saw the effects of our operational momentum this quarter," chief financial officer Robert Rieker explained. "Particularly in the months of July and August, during which we achieved positive comparable store sales of 3% and 2.5%, respectively."

The positive same-store sales figures present a rare positive number for a company that has seen its share place plummet from north of $40 per share in 2015 to near penny stock status this year.

Rieker made sure to drive home this point during his closing remarks on the call, which has seemed to have sparked a jump in the share price from yesterday's close.

"We'd like to reiterate that we're encouraged by the improved comparable stores sales trends we achieved in the second quarter," he concluded, making sure to highlight the positivity that the market seems to have latched onto.

A Big Grain of Salt

Sears' share price jump should be taken with a healthy degree of skepticism, as TheStreet pointed out.

The numbers reported, aside from the rare bright spot in the same store sales, were abysmal.

"In summary, we reported a net loss attributable to shareholders of $508 million ($4.68 loss per diluted share) for the second quarter of 2018, compared to a net loss of $250 million ($2.33 loss per diluted share) for the second quarter of 2017," the company reported in a release after hours last night.

Adjusted EBITDA report was also atrocious, as the pain felt in the quarter was doubled from a loss of $66 million to $112 million.

Additionally, the company has serious cash flow issues as it deals with problems related to its pension payments and agreements with the PBGC as well as numerous loan arrangements touched on by the company.

Sozzi forecasted that the company might not have enough cash to continue to the end of 2019 if it does not see numbers pick up soon.

Real Money contributor David Butler said that the fact that shares are rising to the degree that they are this morning "truly boggles [his] mind."

"I think it's absurd that the stock isn't delisted at this point," he remarked.

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