Sears Holdings Corp (SHLD.O) reported its first quarterly profit in nearly two years, helped by the retailer's US$1.25 billion cost-cutting plan amid doubts about its ability to continue as a going concern.

The company's shares were up 6.6 per cent in light premarket trading on Thursday.

However, sales continued their years-long decline, hurt by lower demand for groceries, apparel and home appliances at its Sears and Kmart stores.

Sears, once the largest U.S. retailer, has been struggling to adjust to the changing retail landscape and rising competition from Wal-Mart Stores Inc, Target Corp and Amazon.com Inc.

The company said in April it expected a net profit of between US$185 million and US$285 million for the first quarter, helped by cost cuts, including through shutting stores and reducing management jobs.

Sales at Sears' U.S. stores open more than a year fell 12.4 per cent, while at Kmart it fell 11.2 per cent in the first quarter ended April 29.

Net income attributable to Sears' shareholders was US$244 million, or US$2.28 per share, compared with a loss of US$471 million, or US$4.41 per share, a year earlier.

Excluding items, the company reported a net loss of US$2.15 per share.

Revenue fell 20.3 per cent to US$4.30 billion.

Sears, which has been closing stores and divesting businesses for years to cope with falling sales and a growing debt pile, warned in March about its ability to continue as a going concern.