Sears Holdings (NASDAQ:SHLDQ) pre-reported Q4 earnings to trumpet the fact that it made a profit in the fourth quarter. That's surprising, given that it also said same-store sales dropped by 15.6% and overall revenue fell from $6.1 billion in Q4 2016 to $4.4 billion in the same period a year later.

Despite those bleak numbers, the company reported what looks like a big turnaround in its fortunes in a filing with the SEC:

We expect net income attributable to Sears Holdings' shareholders of between $140 million and $240 million in the fourth quarter of 2017, which is inclusive of a non-cash tax benefit of approximately $445 million to $495 million related to tax reform, as well as a non-cash impairment charge related to the Sears trade name of between $50 million and $100 million. This compares to a net loss attributable to Sears Holdings' shareholders of $607 million in the prior year fourth quarter.

Yes, Sears made a profit in Q4, but it did so because of a one-time tax benefit. Without the non-repeating tax gain, the company would have lost between $205 million and $355 million. But even that's an improvement over the previous year's loss when you adjust for the fact that the company is much smaller.

The exterior of a Sears store

Sears saw a huge drop in Q4 sales. Image source: Sears.

Will there ever be a profit again?

Sears closed Q3 with about $8 billion in assets and roughly $12 billion in deficits. Some of those assets are real estate, brand names. and other one-time sales. It could sell off some of those assets and report a "profit," but it's not a profit from ongoing operations.

That strategy has been what has kept Sears afloat. The company has been selling assets, including its Craftsman brand and its real estate portfolio, to cover for ongoing losses in its operations. The problem is that it's running out of things to sell and sales haven't stopped declining.

On the surface, the Q4 numbers look good, but how much profit there actually was won't be known until the company releases its profit margin numbers. Sears and sister brand Kmart were selling much of their inventory at 30% off or more during the holiday season.

That's not a sustainable model, and it's likely the company has further increased the gap between its assets and liabilities. If that's true, then the company's "profit" was really just an early start on a going-out-of-business sale.

What's next for Sears?

It's hard to see a way forward for a retailer that has lost customers at a stunning pace for over five years. Sears is nearing the end of the line where it has to start showing profits from operations, not from one-time events.

Nothing in its operations suggests that Sears has a chance of doing this. The chain keeps cutting costs and closing stores, with survival, not long-term success, being the chief goal. The company can't cut its way to a continued existence. It needs to win back customers, and the holiday same-store sales numbers suggest that's not happening.

The tax cuts may have bought Sears a little more runway, but there's very little the company can do with it. Not dying isn't the same as being healthy. Sears may not be dead, but unless there's a dramatic change in consumer behavior, it's a question of when, not if.

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