The operator of Sears and Kmart stores also said it's considering strategic options for its service-agreement business, such as selling it off, to raise cash. Service agreements are when customers pay an extra fee when buying an appliance and the company agrees to fix or replace it if it breaks within a certain time.
The steep loss drove Sears' shares down more than 11 percent in after-hours trading. The news, which comes more than three months after hedge fund billionaire and Sears Chairman Eddie Lampert took over as CEO, sent its shares down almost 13 percent to $50.74.
For the quarter, Sears said sales at stores open at least a year fell 3.6 percent, with the company noting that much of the country experienced a cooler spring than last year. The metric is a key gauge of financial health because it strips out the effect of newly opened and closed locations.
The company, based in Hoffman Estates, Ill., has posted six straight years of declining sales at stores open at least a year. Sears' middle-income shoppers have been hit hard by the economy's woes.
Investors have also feared that the payroll tax increase that took effect in January could hurt results for retailers like Sears. Wal-Mart Stores Inc. (WMT), which reported sales and profits for the first quarter that came in under analysts' expectations, cited the tax changes as a factor in a challenging quarter.
Last year, Sears announced plans to restore profitability by aggressively cutting costs, reducing inventory, selling off some assets and spinning off others. It has also been making changes in stores, such as giving iPads and iPod Touch devices to sales staff to research products and help customers on the sales floor.
But critics have long said the company hasn't done enough to invest in its stores to compete with Walmart, Target and others.
For the quarter, Sears said it lost $279 million, or $2.63 per share. That compares with a profit of $189 million, or $1.78 per share, a year earlier. Not including one-time items, the company said it lost $1.29 per share, worse than the 60 cents per share analysts expected. Revenue fell 9 percent to $8.45 billion, above the $8.37 billion Wall Street expected.
Sears' shares fell $6.42, or 11 percent, to $51.75 in after-hours trading.