Sears stock tumbles after retailer lowers 4th-quarter profit estimates

Shares of Sears Holdings Corp. tumbled in premarket trading Monday after the retailer warned falling sales would force it to post fourth-quarter and full-year earnings well below analyst estimates.

The retailer, lead by hedge fund manager Edward Lampert, said it anticipates earning between $350 million and $470 million, or $2.59 to $3.48 per share for the quarter ending Feb. 2. For the year, the company forecast earnings of $744 million to $864 million, or $5.13 per share to $5.96 per share.

Analysts polled by Thomson Financial had hoped for fourth-quarter earnings of $4.43 per share and a full-year profit of $6.64 per share

Shares fell $10.67, or 11.1 percent, to $85.50 in premarket trading.

The ailing Hoffman Estates-based company, which owns Sears and Kmart stores, said it lowered earnings projections after sales continued to slump.

Domestic same-store sales fell 3.5 percent during the nine-week holiday season in November and December because of weakness in Kmart's seasonal categories and Sears' apparel and tools. The decline was partially offset by higher sales of home electronics.

The company said Sears domestic same-store sales slipped 2.8 percent for the nine-week period that ended Jan. 5, while Kmart same-store sales dropped 4.2 percent.

Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance that measures growth at existing stores instead of newly opened ones.

Sears blamed the poor performance on growing competition, the slowdown in the housing market and consumers' credit fears.

The bad news prompted at least one analyst to downgrade the company's stock.

Credit Suisse analyst Gary Balter dropped his rating to "Underperform" from "Outperform" Monday, citing the company's declining real estate and brand value. He also slashed his price target from $150 to $70.

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