Feb. 28 (Bloomberg) -- Sears Holdings Corp., the biggest U.S. department-store company, said fourth-quarter profit plunged 47 percent, and Chairman Edward Lampert vowed to rein in costs and cut inventory.

Net income dropped to $426 million, or $3.17 a share, in the three months ended Feb. 2, the Hoffman Estates, Illinois- based company said today in a statement. Profit missed analysts' estimates. Revenue declined 6.8 percent to $15.1 billion.

Lampert, in a letter to shareholders today, likened Sears to the New York Giants football team that fashioned an upset victory in this year's Super Bowl. He compared the National Football League team to Kmart, which he brought out of bankruptcy in 2003, and said the company's focus will be on reviving profitability this year.

``Our profit margins continue to lag our competitors,'' Lampert wrote. ``We intend to manage the company's expenses and our inventory position more tightly in 2008 in order to improve our productivity on both fronts.''

Sears announced a reorganization last month to revive sales as consumers burdened by higher fuel, food and mortgage costs cut spending or shopped elsewhere. The retailer posted declines in revenue in stores open at least a year in every quarter since Lampert combined the Sears Roebuck and Kmart chains in 2005.

Not in Portfolios

``I'm not sure that there's anybody out there who says, `Sears or Kmart is my favorite place to shop,''' said David Keuler, a money manager at Mason Street Advisors LLC. The Milwaukee firm holds Sears shares only in index funds and not in its actively managed portfolios.

Seven analysts surveyed by Bloomberg estimated profit of $3.11 a share. Profit was $3.04 excluding a 13-cent gain from the sale of property, the retailer said. A year earlier, profit was $811 million, or $5.27 a share.

Sears fell 20 cents to $101.40 at 4:30 p.m. New York time in Nasdaq Stock Market composite trading. The stock lost 43 percent of its value in the 12 months through yesterday.

To stem declining sales, Lampert ousted Chief Executive Officer Aylwin Lewis last month and reorganized the company into five units focusing on: support services; apparel and home goods; online sales; real estate; and development of its brands.

The retailer also cut 200 jobs, or about 4 percent, at its headquarters to reduce costs. The company has 3,800 stores in the U.S. and Canada.

`Slippery Slope'

In the shareholders' letter today, Lampert raised the possibility that Sears will sell some of its brand-name products, which include Craftsman tools and Kenmore appliances, through other retailers.

A decision to do so ``may put Sears on a slippery slope of creating less traffic to Sears and Kmart stores,'' Credit Suisse Group analyst Gary Balter wrote in a note today. Balter, based in New York, rates the stock ``underperform.''

Sales at stores open at least a year fell 4 percent at Sears stores and 5.2 percent at Kmart for a total of 4.5 percent companywide, led by declines in purchases of appliances and clothing.

``The goal of making the merged Kmart and Sears into a retailing success has become increasingly less achievable, as same-store sales plunge and excuses abound,'' Carol Levenson, a bond analyst and director of research at Gimme Credit, wrote today in a report.

Lampert, Sears's chairman, said the new structure will bolster earnings and attract customers. The retailer has lost shoppers to competitors such as J.C. Penney Co. and Target Corp. in recent years.

``This is a man who is not a retailer, who's pretending to be a retailer,'' Richard Jaffe, an analyst at Stifel, Nicolaus & Co. in New York, said in an interview yesterday. In the retail industry, ``history suggests the near impossibility of taking a distressed business and turning it around,'' he said. Jaffe doesn't have a rating on Sears shares.

In the year earlier quarter, Sears earned $811 million, or $5.27 a share, on sales of $16.2 billion.

To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net.

Last Updated: February 28, 2008 17:02 EST