Check Out Sears Holdings’ dismal holiday sales and its fourth-quarter profit warning.

The company, which owns its namesake and Kmart stores, said same-store sales in the United States fell 3.5 percent in the key holiday period. The result? Sears is now saying its fourth-quarter profit could be less that half of what it earned a year earlier.

Sears’ troubles follow a long line of depressing sales and profit warnings from retailers, as a tottering economy forces U.S. consumers to cut their spending. These normally free-spending folks are now buying only what they need (and maybe some electronics).

And though consumers will spend, 2008 retail sales are forecast to rise at their slowest pace in six years.

But Sears saw this coming. The company warned in November, after reporting a 99 percent drop in its third-quarter profit, that credit trouble and housing issues could further erode its earnings.

One might remember how Chairman Edward Lampert railed at the media and analysts at that time for underestimating the company.

The market will be listening for what he has to say this time?

(Photo: Reuters)

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