Sears Holdings posts unexpected loss on markdowns

By Karen Jacobs

ATLANTA (Reuters) - Retailer Sears Holdings Corp (SHLD.O: Quote, Profile, Research, Stock Buzz) reported an unexpected first-quarter loss on Thursday as sales fell at its Kmart and Sears stores and markdowns hurt margins, pushing its shares down more than 3 percent.

The department store chain said it does not expect "any significant near-term improvement" in the retail environment as the softer U.S. housing market and higher gasoline and food prices hurt consumer spending.

"Sears' brands are all mired in the economic slump," said investor Scott Rothbort, president and founder of LakeView Asset Management in Millburn, N.J.

The retailer controlled by hedge fund manager Edward Lampert reported a net loss of $56 million, or 43 cents a share, for the first quarter ended May 3 compared with a year-earlier profit of $223 million, or $1.45 a share.

Excluding a gain on asset sales, the loss in the current period came to 53 cents a share, the company said.

Analysts were expecting a profit of 15 cents a share, according to Reuters Estimates.

Revenue fell about 6 percent to $11.1 billion. Domestic sales at stores open at least a year fell 9.8 percent at Sears, Roebuck and 7.1 percent at Kmart, pulling total U.S. same-store sales down 8.6 percent. Sears noted declines in appliance, lawn and garden and apparel sales.

Gross margin contracted to 27.3 percent of sales from 28.2 percent a year earlier as the company marked down prices to move goods.