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Sears Jumps on News It Expects to Beat Fourth-Quarter EPS Views

The retailing giant credits improved performance in its full-line stores and strength in its credit business.
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Updated from 9:19 a.m.

Shares in

Sears, Roebuck and Co.

(S) - Get SentinelOne Inc. Class A Report

jumped Tuesday on the news that it expected to beat Wall Street's earnings expectations for the fourth quarter.

The retailing giant said earnings would increase "at a high-teen to low-twenty percentage rate over last year's $1.48 a share because of improved performance in its full-line stores and continuing strength in the company's credit business." Analysts surveyed by

First Call/Thomson Financial

predict earnings of $1.50 a share for the fourth quarter.

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Shares in Sears rose 2 3/16, or 9%, to 32 7/8 in early trading. (Sears finished up Tuesday 1 1/2, or 5%, to 31 9/16.)

"It's certainly a larger upside surprise than I expected," said Steve Kernkraut, analyst at

Bear Stearns

. The strong earnings numbers come at a time when Sears needs good news; it lowered earnings expectations in September after a poor back-to-school shopping season, and its stock plummeted in 1999. The company dumped its long-running "Softer Side" ad campaign last summer in favor of a new tagline that reflected value: "The Good Life at a Great Price. Guaranteed."

Tuesday's announcement, however, could be seen as a turning point, Bear Stearns' Kernkraut said. "It shows that they've stemmed the bleeding." He rates the stock a neutral and said Bear Stearns does not have an underwriting relationship with the company.

Sears also said it is revising its full-year outlook for earnings, with an expected increase at a "high single digit to low-teen percentage rate" over 1998, when it pulled in $3.32 a share. Wall Street has forecast 1999 earnings at $3.43 a share, according to First Call.

In the quarter, buoyed by holiday shopping, Sears pulled in $4.52 billion in revenue from its domestic stores, down incrementally from the same period in 1998.

"In contrast to last year's high level of promotional activity during the fourth quarter, we adopted a more focused promotional plan in order to deliver stronger margin performance, particularly in our apparel business,'' Arthur C. Martinez, the company's chairman and chief executive, said in a statement.

Martinez credited particularly strong sales in home appliances, electronics, home fashions, fine jewelry and the infants' and toddlers' category. The company's Internet sales beat its expectations as well, Martinez said.

Sears closed trading Monday at 30 1/16.