Sears Q1 profit rises 20%, but sales decline (again)

Sears Holdings Corp. (NASDAQ: SHLD) released its first-quarter numbers and the results looked like a reason to celebrate as profits jumped up by 20%. Where did that 20% come from? How about insurance money from Sears locations damaged by 2005 hurricanes and an unrelated legal settlement? In other words, the boring business of retail in Kmart and Sears stores really did not contribute to success here. Surprised?

Net income for the quarter rose to $216 million from $180 million while sales fell 2.5% to $11.7 billion. Yawn. In addition, same-store sales for the quarter fell 3.9% on less demand for home appliances at Sears and slower sales of health and beauty products at Kmart. Since I'm sure many Americans buy health and beauty products at Kmart, I think I'm buying the home appliance sales slowdown in Sears stores more as a reason here. But could that alone have contributed to a 3.9% same-store sales decline?

With Sears Holdings being more of an investment house and clearinghouse for Eddie Lampert rather than a thriving retailer bent on increasing market share, these results aren't surprising. From my experience, Sears stores are mostly dirty locations with what seems like a 1980s-era merchandising mindset (not sure about Kmart -- someone want to chime in here?).

Same-store sales have fallen every quarter since Sears and Kmart combined in 2005 and they don't look to get any better soon. Let's see if Lampert is serious about actually spending money to improve the retailer's operations here. So far, zilch -- and it shows.