Sears Holdings reported a 47.5 percent decline in fourth-quarter profit Thursday as sales fell at its Kmart and Sears stores and it marked down prices.
The retailer, which is searching for a permanent chief executive and restructuring its operations, said it plans to reduce inventory purchases this year and take other steps to improve longer-term performance. Shares fell as much as 2.3 percent in premarket trading.
Though progress was made in reducing debt, "our profit margins continue to lag our competitors," Chairman Edward Lampert said in a letter to shareholders.
Earnings fell to $426 million, or $3.17 a diluted share, in the fourth quarter ended on Feb. 2, from $811 million, or $5.27 a share, a year earlier. The fourth quarter marked the third straight quarterly profit decline for Sears Holdings.
Revenue fell about 7 percent to $15.07 billion.
Lampert said Sears planned to add Lands' End shops and expand its home services offerings. It may also sell its popular Kenmore appliances, Craftsman tools and DieHard battery branded products through other retailers.
"Our mission is to provide our customers with the products and services they want," Lampert wrote. "In many cases, that may not be exclusively through our stores. Instead, it could be online, via catalog, or possibly even through other retail outlets."
Earlier this year, Sears Holdings said it would reorganize into five types of business units: operating, support, online, real estate and brand, with each unit having its own leader.
Sales at stores open at least a year fell 4.5 percent companywide, hurt by weakness in appliances and apparel, with declines of 4 percent at U.S. Sears stores and 5.2 percent at Kmart.
Higher markdowns to clear excess inventory hurt gross margin, which fell to 27.7 percent in the fourth quarter from 29.7 percent a year earlier.
The Hoffman Estates, Illinois, retailer competes against a host of chains, including J.C. Penney in clothing and Wal-Mart Stores and other discounters in general merchandise. Home Depot and Lowe's have chipped away at Sears' dominant market share in appliances.
Some Sears executives have departed recently. Last week, the company said two longtime employees, one of which headed up the appliance division, had retired.
Sears had a cash position of $1.6 billion as of Feb. 2, down from $3.8 billion a year earlier. In 2007, Sears said it used its cash for stock buybacks, capital spending, debt payments and contributions to pension plans.
Sears Holdings shares, which closed at $101.60 on Wednesday, have rebounded about 20 percent from a year low of $84.72 in January, but are down 48 percent from a high of $195.18 in April 2007.
Shares were trading at $100, down 1.6 percent, in premarket trading, after falling as low as $99.25 earlier in the morning.