Sears, which announced plans last month to spin off its brokerage and insurance subsidiaries, lost dollars 833m after taking a one-off charge of dollars 1.25bn to cover claims against its Allstate unit for Hurricanes Andrew and Iniki. In the same three months last year, it made dollars 229m.
Its core merchandise operations reported a loss of dollars 36.4m thanks to a scandal involving the car repair shops attached to its Sears retail stores.
The chain lost more than dollars 80m in revenue and was forced to pay dollars 27m in settlement costs after it admitted exaggerating customer repair bills.
The third-quarter loss, which doesn't include any financial impact from the planned de-merger, overshadowed strong operating results at Sears financial services units.
Without the catastrophe-related insurance charge, Sears would have earned dollars 420m on the back of profit increases at its Dean Witter brokerage and Coldwell Banker property unit.
Sears plans to sell Coldwell Banker, float 20 per cent of Allstate's shares to the public, and spin off Dean Witter to Sears shareholders and the public.