By Phil Wahba
February 15, 2018

Sears Holdings (shld) said on Thursday it anticipates a profit for the fourth quarter, but the rare bright spot for the retailer has little to do with its core business, which continued to bleed during the key holiday season.

The company, which operates the Kmart discount and Sears department store chains, said in a regulatory filing that it expects net income of at least $140 million and perhaps as much as $240 million for the fourth quarter which ended on Feb. 3. That result comes despite ongoing sales hemorrhages: Sears’ comparable store sales plummeted 15.6% for the quarter, broken down as a 12.2% drop at Kmart and an 18.1% decline at Sears. Total revenue was $4.4 billion, compared with $6.1 billion a year earlier, a drop attributable to store closings as well as declining sales at stores still open.

Instead, Sears caught a break from a factor outside of its control: tax reform legislation. The company said the tax benefit would result in a $495 million windfall, without which Sears would have reported another loss. (Last month, before the tax reform, Sears had said it expected a loss of between $200 million and $320 million for the quarter.)

Though the company has pointed to the current turmoil in the retail industry, the results came amid the strongest holiday season in years for retailers generally, one that buoyed rivals like Kohl’s (kss), Macy’s (m) and J.C. Penney (jcp). (For the industry as a whole, retail spending in November and December rose 4%.)

Sears CEO Eddie Lampert, a hedge fund manager who also controls the company as its top shareholder, has said many times in recent years he is trying to reinvent the retailer as a company that is less dependent on stores and focused increasingly on a membership model. It has been innovative on some fronts included shrinking the size of some stores and opening appliance-focused smaller stores. Yet the company’s fortunes have only worsened ever more quickly: in January it announced another round of store closings and financial maneuvers to stave off any cash crunch. Sears has also been selling off key assets such as some of its best stores as well as brands like Craftsman,

The company acknowledged its difficulties in the filing, saying that “in order to remain a viable competitor in the face of a very challenging retail environment, (Sears) Holdings is working to transform to a less asset-intensive business model.”

Still, investors seemed relieved at the tax break, sending shares up 10.5% to $2.54, though that is well below their 52-week high of $14.32

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