Sector Snap: Department stores retreat

Same-store sales is an important industry metric that measures sales at stores open at least one year.

Buckingham Research Group analyst David J. Glick reduced his third-quarter forecast for Macy's, J.C. Penney, and Kohl's. Department store retailers like these companies have faced softening sales as consumer confidence has fallen in the turbulent U.S. economy.

Glick said it is unclear how much of recent weakness in the sector can be attributed to "bailout drama," financial market turmoil, or softening consumer spending. "Most likely it is a combination of all of the above," Glick wrote in a client note.

For Macy's, which Glick rates "Neutral," the analyst warned of sales weakness as the year continues.

"Given the challenging August department store industry comps, it is unlikely Macy's can achieve the sales guidance which supports its current earnings per share guidance for the second half of 2008," Glick wrote in a client note.

Shares of Macy's slipped 83 cents, or 4.6 percent, to $17.16 in midday trading.

Glick also rates shares of J.C. Penney and Kohl's "Neutral." He warned that the companies' third-quarter same-store sales outlooks are in "jeopardy."

Shares of J.C. Penney lost 87 cents, or 2.6 percent, to $32.46, and shares of Kohl's declined $1.15, or 2.5 percent, to $44.91.

Elsewhere in the sector, shares of Saks Inc. retreated 13 cents to $9.12, and Nordstrom Inc.'s stock lost $1.57, or 5.5 percent, to $27.21.