Investors cheered Sears Holdings ( SHLD) Wednesday, bidding up its shares as the company squeezed better-than-expected profits out of weakening revenue in its holiday quarter. The retail behemoth cobbled together by hedge fund manager Ed Lampert reported that its fourth-quarter earnings more than doubled from a year ago, but those results came from skewed comparisons from the merger of Kmart and Sears that formed the holding company one year ago. Allowing for the merger, Sears Holdings reported that its quarterly earnings on a pro forma basis rose 10%, while its sales dropped 4.5%. Its overall same-store sales for the year fell 5.3%, and the retailer warned of threats from competitors as it faces increasing pressure from the likes of Wal-Mart ( WMT) and Target ( TGT). "The company continues to face market share pressure as competitors open additional locations and engage in heavy promotional activity," Sears said. "The company expects these trends to continue in the foreseeable future, and these trends may negatively affect the company's future sales performance and results of operations." On a reported basis, Sears Holdings earned $648 million, or $4.03 a share, in the fourth quarter, up from $309 million, or $3.09 a share, last year. Sales rose to $16.1 billion from $5.9 billion a year earlier. Analysts surveyed by Thomson First Call were predicting average earnings of $3.62 a share on sales of $16 billion. Its pro forma results, which attempt to combine last year's results from Kmart and Sears, were less impressive but provide a more realistic picture of the retailer's progress. On that basis, the company's earnings were up 10% from last year's pro forma earnings of $589 million, or $3.62 a share. Its top line fell from the pro forma revenue of $16.8 billion last year. Shares of Sears Holdings recently were up $13.43, or 11.4%, to $130.70.