Standard & Poor's downgrades Sears Holdings

NEW YORK - Standard & Poor's Ratings Services on Thursday downgraded Sears Holdings Corp., saying it expects earnings for the operator of Sears and Kmart stores will remain under pressure amid the recession.

The ratings agency lowered its ratings on the Hoffman, Ill.-based company and said its outlook on the retailer is negative.

It lowered Sears' corporate credit rating to "BB-" from "BB" and its bank loan rating to "BB+" from "BBB-."

Ratings on Sears Roebuck Acceptance Corp. and Sears DC Corp. and Sears Canada Inc., all senior unsecured, were lowered to "BB-" from "BB." S&P said the short-term and commercial paper ratings on Sears Roebuck Acceptance Corp. remain at "B-2."

The company on Tuesday posted a $146 million third-quarter loss, worse than had been expected, and its second quarterly loss in the past year. The loss was due mainly to hefty charges related to store closures and disappointing U.S. sales.

The company withdrew its operating profit outlook because of the country's economic woes, which is seeing consumers tighten their spending.

S&P credit analyst Ana Lai wrote that the agency doesn't anticipate the situation for Sears will improve.

She wrote it was S&P's "expectation that sales and earnings will remain under pressure in the important fourth quarter and into 2009 given the current difficult economic environment."

Shares of Sears rose $3.36, or 8.9 percent, to close at $41.04 on Thursday.

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