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Pro Analysis

Breakingviews: Retailers’ upturn is a false bill of goods

People walk through a nearly empty shopping mall on March 28, 2017 in Waterbury, Connecticut.
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People walk through a nearly empty shopping mall on March 28, 2017 in Waterbury, Connecticut.

Several major retailers seem to be pulling back from the brink. Sears, Abercrombie & Fitch and Best Buy each reported an array of encouraging numbers on Thursday. Tiffany's quarterly slump the day before, though, shows that such hopes of a turnaround offer a false bill of goods.

Sears, the iconic chain run by hedge-fund manager Eddie Lampert, reported its first quarterly profit in nearly two years. That wasn't because of more sales. Its $244 million in net income stemmed mainly from cost cuts and its sale of tool-maker Craftsman. It still has shelves-loads of problems from public squabbles with its suppliers, an onerous burden of nearly $5 billion in long-term debt and pension liabilities and a constant shuffle to pay bondholders.

Abercrombie & Fitch's more successful brand, Hollister, managed to increase the amount of beach-inspired merchandise it hawks to teens, though it couldn't push up its parent's overall same-store sales. Still, those did at least fall by less than Wall Street analysts expected.