Sears quarterly profits slump 99%

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Retailer Sears has seen quarterly profits tumble 99%, after poor sales at its Sears and Kmart outlets.

The firm saw profits drop to $2m (£970,000), or 1 cent a share in the three months to 3 November from $196m or $1.27 a share, a year earlier.

Sears sees more problems ahead, as the credit squeeze dampens consumer spending over the holidays but also said there were other issues at play.

The firm's shares fell 13% to $16 - nearly half what they were in April.

Free-fall

"Kmart and Sears have been in a downward spiral for the last two years," said Britt Beemer, founder of America's Research Group, which examines how consumers behave.

"I think [they are] in a major free-fall.

Analysts say the latest results raise questions about the direction of the firm, which was the result of a tie-up between Sears, Roebuck and Kmart in 2005.

In a research note called "Death Spiral?", Gary Balter, an analyst with Credit Suisse, wrote there was "nothing good" to emerge from the results.

While highlighting broad issues that have hit other retailers, chief executive Aylwin Lewis, said: "We are very disappointed in our performance for the third quarter. We cannot blame our results entirely on the retail and macro-economic environments."

He added: "We have much on which to improve and are working hard to do so."

Revenue dropped 3% to $115bn, while overall US same-store sales dropped 4.6%.

Taken individually, same store domestic sales fell 4.2% at Sears and Roebuck while Kmart's same store sales fell 5%.