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Byline: -- Staff and Wire Services

Fed chief: House market sagging

WASHINGTON -- The housing market, after flying high for five years, has lost altitude and appears headed for a safe landing, Federal Reserve Chairman Ben Bernanke said Thursday.

``It seems pretty clear now that the U.S. housing market is cooling,'' Bernanke said in a question-and-answer session after a speech he delivered on banking in Chicago.

He noted that home sales are slowing, as is housing construction.

``Our assessment at this point ... is that this looks to be a very orderly and moderate kind of cooling,'' Bernanke said.

One of the things that Bernanke and his Fed colleagues are keeping close tabs on is the extent to which a housing cool-down will slow overall economic activity.

Sears profits up on new strategy

CHICAGO -- Executives at Sears Holdings Corp. rolled the dice a year ago on an aggressive profitability strategy, and it seems the gamble is paying off.

But analysts say the company needs to collect its winnings and move on to another table where it can address sliding same-store sales and lost market share.

Sears turned a $9 million loss during the first-quarter of 2005 into a $180 million profit for the same period this year, easily beating Wall Street estimates.

Investors celebrated by opening their wallets as Sears shares climbed $19, or 13.8 percent, to $156.97 in midday trading on the Nasdaq Stock Market.

But the news wasn't all rosy for Sears.

The company announced Thursday that it will pay $215 million to settle a federal class-action lawsuit. And the same earnings report that helped boost the company's stock also showed same-store sales continue to decline.

Burger King has success with IPO 

MIAMI -- Shares of Burger King's parent company rose 3 percent from their initial public offering price Thursday, in their first day of trading.

Burger King Holdings Inc. sold 25 million shares of common stock at $17 each in its IPO that was completed late Wednesday. The shares represent about 19 percent of the company's total, putting its overall value at about $2.25 billion.

But that still leaves the nation's second-biggest hamburger chain far behind its two biggest rivals -- McDonald's Corp., which has a market value of about $43 billion, and No. 3 Wendy's, which is worth about $7 billion.

Its shares rose 50 cents to close at $17.50 on the New York Stock Exchange under the symbol BKC. They traded as high as $18.15 earlier in the day.

Burger King raised $393 million in net proceeds from the offering to pay off debt.

The total value of the IPO was $425 million before underwriters' commissions and fees. That makes it one of the biggest restaurant IPOs, according to Thomson Financial.

Gap's Q1 profits take 17% slide

SAN FRANCISCO -- Gap Inc.'s first-quarter profit fell by 17 percent, dragged down by a deepening sales slump that has underscored the clothing retailer's inability to keep up with fickle fashion tastes.

The San Francisco-based company said Thursday that it earned $242 million, or 28 cents per share, for the three months ended April 29. That compared with net income of $291 million, or 31 cents per share, a year ago.

Revenue totaled $3.44 billion, a 5 percent decrease from $3.63 billion last year.

In a more telling sign of Gap's distress, sales at its stores open for at least a year decreased by 9 percent during the quarter.

Gap's same-store sales have now fallen in seven consecutive quarters, with the latest three-month period marking the biggest erosion so far. The company warned Thursday that its same-store sales are likely to fall again in the current quarter ending in late July.