Sears Holdings Corp. said Monday that sales at stores open at least a year fell 3.5% in the holiday period and warned that fiscal fourth-quarter profit could be less than half that of a year earlier, sending its shares down 5%.
The retailer run by hedge fund manager Edward Lampert blamed the weak holiday sales on increased competition, the crumbling U.S. housing market and the credit crunch -- problems it had flagged in November.
The company's shares fell $4.79 to $91.38. They sank to as low as $86.04 during regular trading.
The stock, which was created by the merger of Kmart Holding Corp. and Sears, Roebuck & Co., has fallen 30% since it began trading as Sears Holdings in March 2005. It is down more than 50% from a high of $195.18 last April.
Wall Street analysts downgraded Sears Holdings' stock, citing its vulnerability to an economic downturn.
"We expect the retailer to experience accelerated share loss and profit pressures in an increasingly tough macro backdrop," Goldman Sachs analyst Adrianne Shapira said in a research note. She downgraded Sears to "sell" from "neutral."