Dec. 2 (Bloomberg) -- Sears Holdings Corp., the largest U.S. department-store company, posted a loss that was wider than analysts estimated as cash-strapped consumers bought less clothing, appliances and home furnishings, pushing sales down for the seventh straight quarter.

Sears abandoned its earnings forecast for the remainder of the year and said today it would repurchase as much as $500 million in additional shares and close more stores.

Third-quarter revenue fell 8.3 percent to $10.7 billion from $11.6 billion as shrinking housing and stock values and climbing unemployment helped send the U.S. economy into a recession. The results indicate that Chairman Edward Lampert has yet to find a successful strategy to win customers since he brought the Sears and Kmart chains together in 2005.

“It’s an unmitigated disaster,” Bill Dreher, director and senior retail analyst at Deutsche Bank Securities Inc. in New York, said in a telephone interview today. “It doesn’t appear that they can control their business. They are woefully unprepared to navigate this incredibly difficult environment.” He recommends investors sell the shares.

The loss of $146 million, or $1.16 a share, for the three months ended Nov. 1 compared with net income of $4 million, or 3 cents, a year earlier, Hoffman Estates, Illinois-based Sears said in a statement. Excluding store closings and a gain from hedging, Sears said it lost 90 cents.

U.S. sales at stores open at least a year fell 9 percent in the quarter, Sears said. For November, comparable-store sales declined 8.7 percent. Lampert hasn’t posted a same-store sales increase in the three years since he combined the chains.

‘Bermuda Triangle’

“Sears is in the Bermuda Triangle of retailing,” Dreher said. “They’re selling large-ticket merchandise, they’re selling home- and apparel-related merchandise. They are selling it to a low-income customer and they’re selling it without a unique selling proposition.”

Sears surged $4.25, or 13 percent, to $36.09 at 4 p.m. in Nasdaq Stock Market composite trading after falling 12 percent yesterday. The shares, which have gained or lost at least 10 percent eight times in the past three weeks, have plunged 65 percent this year.

The additional stock buyback also helped assuage investors, U.S., Richard Hastings, consumer strategist at Global Hunter Securities LLC of Newport Beach, California, said in an e-mail. Sears has announced $5.5 billion in stock buybacks since the 2005 combination.

Its August forecast of an increase in earnings before interest, taxes, depreciation and amortization during the second half of the year is “no longer relevant” because of the deterioration of the U.S. economy, Sears said. The projection had been based on little-changed or a small decline in same- store sales.

Analysts’ Estimates

Six analysts surveyed by Bloomberg estimated an average third-quarter loss of 51 cents a share. Four projected sales to retreat to $10.8 billion.

U.S. retailers have cut new merchandise orders and store expenses and slowed new openings to conserve cash. Target Corp. last month said it’s suspending a $10 billion share repurchase program until sales improve.

Short-term borrowings rose $1.9 billion, primarily from its $4 billion revolving line of credit, the department-store company said. At the end of the quarter, Sears had $1.17 billion in cash, 24 percent less than a year earlier.

It also shored up cash by cutting inventory at U.S. stores by $575 million from the year-ago quarter.

“Given the current economic and retail environment, we will carefully evaluate alternatives that provide financial flexibility in the near-term,” interim Chief Executive Officer W. Bruce Johnson said in the statement.

Unemployment Rises

U.S. employers cut 240,000 jobs in October, a 10th consecutive decline in payrolls. The unemployment rate rose to 6.5 percent, the highest level since 1994, according to Labor Department statistics.

Macy’s Inc., J.C. Penney Co., and Kohl’s Corp., the second- , third- and fourth-largest U.S. department-store chains, have also seen same-store sales decline.

The third-quarter included an after-tax charge of $61 million, or 49 cents a diluted share for closing 14 stores. The company gained $29 million, or 23 cents after tax and minority interest, from Sears Canada hedge transactions.

Sears, which plans to close another eight locations and may shut others, has more than 3,800 stores in the U.S. and Canada. The retailer said the store closings will cost it as much as $21 million in the fourth quarter.

Separately, Sears named Scott Freidheim, a former Lehman Brothers Holdings Inc. executive, as executive vice president of operating and support units.

Ex-Gap Inc. executive Nick Coe was named president of the company’s Lands’ End division, while Mark de Bruin, formerly at Rite Aid Corp. is joining as president of pharmacy services, the company said.

Lehman Brothers

Freidheim, 43, who will report to Johnson, was most recently chief administrative officer at Lehman, which filed for bankruptcy in September.

Freidheim met Lampert when Lehman advised the hedge-fund investor on the Sears-Kmart merger.

“I look forward to joining Eddie, Bruce and the others on the team working on the turnaround of one of America’s iconic brands,” Freidheim said in an interview. “Eddie is the most capable and respected investor of my generation.”

Lampert has ousted two CEOs since the merger, and several other executives have also left.

“We continue to search for a permanent CEO,” Chris Brathwaite, a company spokesman, said in an e-mail. He declined to comment on timing.

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

Last Updated: December 2, 2008 18:29 EST