Department store group Sears posted an unexpected first-quarter profit after slashing advertising costs and payroll expenses.

The retailer also extended a credit agreement to increase the amount available to $4.1bn (£2.6bn) until March 24, 2010, and $2.4bn (£1.5bn) from March 25, 2010, to June 2012.

Net income in the three months to May 2 was $26m (£16.4m) compared with a loss of $56m (£35.3m) the year before.

Sears cut inventories to $9.46bn (£5.96bn) from $10.3bn (£6.49bn). Sales fell 9.2 per cent to $10.1bn (£63.7bn) and like-for-like sales fell 7.4 per cent.