Having lowered its costs and expenses and reduced its inventory, Sears Holdings Corp (NASDAQ:SHLD), the operator of Sears and Kmart stores, narrowed its fourth quarter loss to $358 million, or $3.37, the company announced today.

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Sears return to profitability?

That loss compares to the year-over-year quarter loss of $489 million, or $4.61 per share. Profitability has been evading the Hoffman Estates, IL based company for some time and last December the retailer announced that it will trim inventory, sell assets, and spin off its Lands’ End clothing business.

Revenue for the company fell 14% to $10.59 billion from $12.26 billion. Those numbers reflect not only just the closing of numerous stores but the fact that there was one less week in the latest quarter.

On a brighter note, Sears Holdings Corp (NASDAQ:SHLD)’s total costs and expenses declined to $10.73 billion from $12.88 billion, while promised inventory cutting saw a decline to $7 billion from $7.6 billion.

‘Shop Your Way’

Sears Holdings Corp (NASDAQ:SHLD) is still struggling with its transition from running a store network to a business that is members-focused with its most loyal shoppers receiving bigger incentives to keep shopping. Edward Lampert, the company’s Chairman and CEO explained today that full-year results were still reflecting this transition as the company continues to both invest in its loyalty program and market its “Shop Your Way” belief.

“While transformations of this size are challenging, and our financial results do not currently reflect our progression in member engagement, we believe the changes we are making through Shop Your Way and integrated retail will benefit us in the changing retail landscape,” Lampert said.

For aggregate 2013, Sears Holdings Corp (NASDAQ:SHLD) lost $1.37 billion, or $12.87 per share. In the previous year it lost $930 million, or $8.78 per share.

Annual revenue declined 9% to $36.19 billion from $39.85 billion in line with analysts’ expectations. Sales at stores that had been open for at least a year declined 3.8% with sales at Sears down 4.1% compared to a drop of 3.6% at Kmart stores.

Following the earnings call, shares in Sears Holdings Corp (NASDAQ:SHLD) spiked at the bell to nearly $43.50. In the hour since (10:33AM EST), Sears has given up most of these opening gains and is presently trading at $42.26 up $1.95 or 4.85%.