updated 5/29/2008 9:08:00 AM ET 2008-05-29T13:08:00

Retailer Sears Holdings Corp. swung to a $56 million first-quarter loss and fell far short of Wall Street forecasts, as its customers were forced to spend more of their money to cover the soaring costs of gas and food.

The results equated to a loss of 43 cents per share — a dramatic decrease from a last year's first quarter profit of $223 million, or $1.45 per share. On an adjusted basis, Sears reported a loss of 53 cents per share, compared with profits of $1.15 per share in the same period last year.

Meanwhile, the Hoffman Estates-based retailer lead by financier Edward Lampert said its sales slipped nearly six percent to $11.1 billion.

Analysts surveyed by Thomson Financial expected profit of 15 cents per share on sales of $11.41 billion.

Executives said same-store sales slumped 9.8 percent in the U.S., while Kmart saw its comparable store sales fall 7.1 percent. Total domestic comparable store sales declined 8.6 percent. Same-store sales are an important retail industry metric of sales in stores open at least one year.

"Our first quarter results reflect the difficult economic environment and intense competition for consumer business," W. Bruce Johnson, Sears Holdings' interim chief executive officer and president said in a statement. "That said, since May 3, 2008, our sales declines have moderated somewhat."

Especially hard hit were sales of home appliances and products for lawn and garden care. Clothing sales also slumped.

Declines reflected competition and a weak U.S. economy that has been battered by a turmoil in the housing market, Sears said.

Consumer sentiment fell to its lowest level since October 1992 when the economy was coming out of a recession, the New York-based Conference Board reported this week.

Sears, which is fighting to bring back customers and their wallets to its 3,900 stores, said it expects its sales and margins to be pressured for the rest of the year due to tough economic conditions.

Sears said Thursday its board approved the buyback of $500 million in additional shares.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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