Sears Holdings' (NASDAQ: SHLD) second quarter report, issued today, reflects a slump in both the domestic Sears and K-Mart store sales. Net income dropped from $294 million to $176 million, and diluted EPS fells from $1.88 to $1.17. The shortfall didn't catch analysts by surprise, though; those polled by Thompson had been expecting $1.132.

U.S. Sears stores suffered a drop-off in sales of 4.3% for the quarter and 3.9% for the first half, while K-Mart declined a 3.8% for the quarter, 4.1% for the half. The lone strong performer was Sears Canada, where sales grew by 3.4%.

The company reported that K-Mart's most troublesome product areas were lawn and garden, home, and health and beauty products, while women's apparel performed slightly better than expected. Sears Domestic took a hit in home appliance sales, especially weather-related items such as air conditioners, while electronics and apparel sold fairly well.

Sears also purchased almost 10 million shares of its stock at an average price of $153.66 in this quarter. The stock has since dropped to the $140 neighborhood, down today in early trading.

Bloggers including our own Julie Tilsner have made no secret of their distaste for the Sears customer experience, and I feel the same way about the increasingly tawdry K-Mart chain. Comparing Sears' recent performance to competitors such as J.C. Penny (NYSE: JCP) and Target (NYSE: TGT), our opinion seems to be shared by many shoppers.