Judging by the sales figures and Q2 guidance Sears Holdings (NASDAQ:SHLD) released yesterday, the retailer's in the same leaky boat as big-box brethren like Wal-Mart (NYSE:WMT) and Home Depot (NYSE:HD). Many struggling retailers seem to be casting about for ways to plug the holes in their hulls; Wal-Mart recently announced a cutback in new store growth. Sears, beset by poor sales and similarly lackluster earnings, seems to hope that adding to share buybacks will help keep shareholder value afloat through its current stormy weather.

Sales not so good
Second-quarter comps declined at both Sears (down 4.3%) and Kmart (down 3.8%). Unfortunately, that trend's nothing new. Both brands reported negative comps last year (a slide of 3.7% combined), and similar results for the first quarter. Comps, or same-store sales -- sales at stores open at least a year -- are the most critical measure of a retailer's health.

Earnings not much better
Back in July, the company warned that second-quarter profits would come in between $160 million and $200 million, down from $272 million last year, and about half what the Street was expecting. Yesterday, it solidified that estimate to between $170 million and $185 million, pretty much the midpoint of the earlier announced range. The market took comfort that earnings weren't sliding even further.

At least the company was short on excuses. While noting the housing-market slowdown and economic pressures, CEO Aylwin Lewis flatly stated his disappointment with second-quarter results, and said the company will "work hard to improve our financial performance going forward."

That extra something
To cushion the disappointing sales and earnings, Sears announced a large $1.5 billion addition to its share repurchase program, a nice follow-up to a similar amount of shares it repurchased during the second quarter. This was enough to vault the stock forward by more than $7 on Monday, a better-than-5% gain.

The valuation challenge
I must admit that with more than 25 years of retail experience, I still have a hard time putting a solid value on Sears' shares. The company has a strong balance sheet and plenty of cash flow -- averaging $1.2 billion annually for the past two years. The P/E multiple of 14 times trailing-twelve-month earnings looks reasonable, compared to 17 times for Wal-Mart and 19 times for Target (NYSE:TGT).

But I can't get over the sales declines. When fewer customers are shopping at your stores every year, earnings will eventually take a major nosedive (which we're starting to see in the second quarter). Can the stock price hold up in this environment? For now, the Street appears happy. The Motley Fool CAPS community thinks the current price is a value.

Perhaps the company's highly valuable portfolio of real estate locations is enough to justify its price. But for my money, I'm more comfortable investing in retailers who can set sail on a sturdy and growing top line.

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Fool contributor Timothy M. Otte surveys the retail scene from Dallas. He welcomes comments on his articles, and owns shares of Wal-Mart, but none of the other companies mentioned in this article. The Fool's disclosure policy always wears its life jacket.