• by Sarah Mahoney  @mahoney_sarah, November 12, 2008

Macy's has posted a $44 million loss for the third quarter, and slashed its expansion plans nearly in half, as industry observers brace themselves for a new wave of downbeat reports from other retailers. Sales for the Cincinnati-based chain fell 7% to $5.49 billion. Same-store sales sank 6% for the quarter.

Meanwhile, commenting on general sales trends in the fashion department-store segment, Deutsche Bank retail analyst Bill Dreher Jr. warns in a report that there are early indications that November sales could be even worse than the sorry results that dominated September and October.

"The ever-present game of chicken between retailers and consumers over holiday promotions is decidedly tilted in the favor of the consumer," he adds. "We believe our nation of increasingly smart shoppers is very aware of this. It would appear that we are definitely not near the end of this miserable cycle, and not even convinced that this is as bad as it gets. The 'valley' may be deeper than we anticipated, and almost certainly wider than expected."

In its release on the earnings, Macy's says that it is cutting capital expenditures from the $1 billion planned, to about $550 million. But it reiterated its earnings guidance, and says its marketing and merchandising tactics are solid.

"Within this poor economic environment, Macy's continues to outperform most of our major competitors in same-store sales," it says. "This gives us confidence in our strategies for gaining market share, particularly as the My Macy's localization initiative is yielding promising early results." Executives cited the company's marketing--including the "Believe" campaign for Macy's and "Oh What Fun" campaign for Bloomingdale's--as examples of its continued efforts to position Macy's as a preferred shopping destination.

Still, it is looking for woeful results over the holidays, predicting a same-store sales decline of between 1% and 6%.