Shares of Sears Holdings
The $189 profit works out to $1.78 per share and contrasts with the company's losing record of late, including the $1.58 loss it recorded at this time last year. The profit stems from gains related to massive asset sales, including many stores -- which is why if you exclude on-time items, the company actually reported a loss of $0.31 per share. That’s far better than the year earlier, but it's a loss nevertheless.
One of the reasons I'm less than excited by this performance is Sears' track record for capital allocation. Eddie Lampert is known for pouring his company's money into share repurchases instead of store upkeep or improving operations. So while it's all well and good that Sears is bringing in the bacon, it had to shed assets to do it, and that's a one-time fix. The company's reputation doesn't exactly inspire confidence that it'll responsibly use that money, either.
Making matters worse is that, as I see it, this company has historically shed many of the wrong assets. Lampert has said frequently in the past that the future of Sears is in smaller-format stores. He's not alone in this revelation, as fellow retailers Target
Yet Sears Holdings zigged when it should have zagged: It spun off its smaller Orchard Supply Hardware
I'm not alone, either. Sears has become the model of poor performance in the retail sector. Another ailing retailer, J.C. Penney
For everything that Sears Holdings seems to be doing wrong, there's one retailer that's doing everything right. Our chief investment officer chose it to be The Motley Fool's Top Stock for 2012, and you can learn all about it by clicking here.
Austin Smith owns no shares of the companies mentioned here. The Motley Fool owns shares of Best Buy. Motley Fool newsletter serviceshave recommended creating a diagonal call position in Wal-Mart Stores. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.