Sears Holdings Corp - the sixth largest retailer in the United States, behind Wal-Mart, The Home Depot, Costco, Target and Kroger – announced on Monday that its same-store sales across the United States decreased 3.5 percent during the holiday period and, furthermore, the company expects a fourth quarter profit of less than a half of the earnings recorded a year ago in the same period.

The company’s announcement sent its shares down 12 percent in premarket trading.

Sears Holding also said that the main cause that led to the slow sales during the holiday season was the increased competition and also the crumbling housing market and the credit crunch.

Sears’ sales report and the profit forecast happened the same day two Wall Street analysts downgraded Sears' stock because its alleged vulnerability to an economic downturn.

"We expect the retailer to experience accelerated share loss and profit pressures in an increasingly tough macro back drop," Adrianne Shapira, analyst at Goldman Sachs, said in a research note, Reuters informed. Shapira downgraded Sears to "sell" from "neutral."

Credit Suisse’s analyst, Gary Balter, downgraded Sears from "outperform" to "underperform", citing the fact that the value of the company’s real estate has declined materially. Balter cut his price target on the stock to $70 from $150.

Throughout the nine weeks which ended in January 5, Sears’ same-store sales decreased 2.8 percent at Sears’s stores and 4.2 percent at Kmart stores.

These figures led Sears to forecast a decline in fourth-quarter earnings. The department store operator estimated that its earnings in the fourth quarter will be somewhere between $350 million and $470 million, or $2.59 per share and $3.48 per share, while a poll made by Thomson Financial among analysts forecasted a net income of $4.43 per share for the same quarter.

As for the full-year earnings forecast, Sears estimates it will record a profit of $744 million to $864 million, or $5.13 per share to $5.96 per share, while analysts expect $6.64 per share.