Sales at Sears Holdings, whose chairman and top shareholder is hedge fund manager Edward Lampert, have fallen every year since it was formed through the merger of Sears and Kmart in 2005.

And so far this holiday season, the drop has continued. Same-store sales at Kmart were down 4.4 percent in the current quarter through Christmas Day, and down 6 percent at Sears' U.S. stores. Companywide, they were down 5.2 percent, the company said on Tuesday.

Sears said that typically, it would keep "marginally performing" stores open to give them time to improve, but "we no longer believe that to be the appropriate action in this environment."

The store closings follow its announcement last quarter it would shutter 10 stores. Kmart and Sears have a combined 2,177 U.S. full service locations and another 500 in Canada.

Sears blamed poor consumer electronics sales in a tough economic environment "especially for big-ticket items" for more than half of the decline in its namesake chain's domestic same-store sales.

It even reported lower layaway sales, which are designed to allow lower income shoppers to pay for items in installments.

Sears Holdings said the lower sales and margin pressure would lead to adjusted fourth-quarter earnings before interest, debt and amortization of less than half of the year-ago quarter's $933 million figure.

Last month, Sears reported a much wider than expected quarterly loss as higher markdowns and pricing pressures in appliances squeezed margins.

The retailer, home to brands including Craftsman tools and Kenmore appliances, expects to earn $140 million to $170 million by selling of inventory in affected stores and selling or subleasing store space.

Sears also expects to record a non-cash charge of $1.6 billion to $1.8 billion in the fourth quarter related to a valuation allowance on certain deferred tax assets.

(Reporting by Phil Wahba in New York, and Supantha Mukherjee in Bangalore; Editing by Anil D'Silva, Roshni Menon, Dave Zimmerman)

• A Permanent Economic Emergency