Just days after announcing its third-quarter profits would fall below expectations due to a weakening of its credit card business, Sears, Roebuck and Co warned its annual results would be off-target due to worsening credit card debt.

On Thursday the department store retailer posted a 28 per cent drop in third quarter profits of $189 million, down from $262 million a year ago. The results reflect a $222 million increase in the domestic provision for uncollectable credit card accounts.

Hoffman Estates, Illinois-based Sears said third-quarter revenues in its retail and retail related businesses slipped 0.7 per cent from a year ago to $7.26 billion. A rise in sales in its Lands' End direct-to-customer business failed to offset revenue declines in its 870 full-line stores it added.

In its 2002 full-year earnings guidance, Sears lowered its expected earnings from $5.15 to $4.86 per share. Last year it earned $4.22 a share.