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Sears is giving new meaning to the age old Wall Street adage: if you set the bar low enough, you can hurdle over it every time.

The sales collapse at the once-storied US retailer continued apace during the third quarter, and the company racked up another $558m in losses, bringing the total to over $11bn over the past seven years.

But shares surged as much as 28.3 per cent in early trading on Thursday as investors appeared to be cheered by the fact that the results were slightly less disastrous than expected.

Same-store sales — a key industry metric — tumbled 15.3 per cent in the three months to October 28. Within this, the gauge was down 13 per cent at Kmart and down 17 per cent at Sears, as the company closed down in-store pharmacies and cut back on the range of consumer electronic products it sells in those stores.

Overall revenue slumped by more than a quarter to $3.7bn during the period, with store closures contributing to over half of the decline, Sears said.

Net loss narrowed to $558m from the $748m recorded in the prior-year period.

Once one of the largest US retailers, Sears has struggled to turn a profit in recent years as Americans increasingly shop online rather than in shopping centres.

High debt levels and falling sales have left Sears in a precarious financial situation. In an effort to stabilise its finances, the company has been selling assets, amended its credit facilities with lenders and is looking to cut costs by $1bn. It has also received loans from affiliates of ESL Investments, the hedge fund run by Sears chief executive Eddie Lampert.

Still, total long-term debt stood at over $2bn at the end of October, down from the $3.1bn a year ago but still more than four times the company’s $500m market value. Short-term borrowings, meanwhile, increased to $1.1bn from $615m 12 months ago.

Suppliers — the lifeblood for retailers since they provide the products that stores depend on to draw traffic — are increasingly seeking ways to protect themselves against the risk of nonpayment , such as reducing shipments or demanding upfront cash payments.

Critics have charged that Sears is only kicking the can down the road, given that there is only so much asset disposal, cost cutting and store closures it can do.

Mr Lampert hailed on Thursday the narrowing of third-quarter losses as “reflective of the success of the [company’s] strategic priorities.”

But ultimately, Sears needs to turn around sales and draw shoppers back into its stores. Unfortunately for long-suffering investors, there is little sign of that in sight, especially when deep-pocketed giants like Amazon and Walmart have the will and resources to engage in a prolonged price war.

Shares in Sears, after the initial surge, sharply pared their gains to just 5.7 per cent higher in late-morning trade.

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