Oct. 8 (Bloomberg) -- J.C. Penney Co., Kohl's Corp. and Nordstrom Inc. forecast third-quarter profit that may trail analysts' estimates after September sales fell because of consumer concerns that the Wall Street meltdown will cost them their jobs and savings.

Sales rose 2.4 percent at Wal-Mart Stores Inc., the world's largest retailer, and 7 percent at Costco Wholesale Corp., helped by food purchases and discounts, as shoppers shied away from full-price department stores.

The biggest banking crisis since the Great Depression is threatening retailers' sales going into the holiday-selling season, the largest source of revenue for most stores. Consumer spending, which accounts for two-thirds of the U.S. economy, may remain sluggish as banks hoard cash and job losses mount.

``Consumers are shell-shocked right now, and I don't think they've got the ability to spend,'' Stephanie Hoff, an analyst at Edward Jones in St. Louis, said today in an interview. ``Usually if sales are weak for this time of year, it doesn't bode well for holiday.''

The collapse of the U.S. housing market has upended the economy, frozen credit markets and saddled financial firms with almost $600 billion in mortgage-related writedowns and credit losses. U.S. stock indexes are heading for their biggest annual decline since 1937.

The Federal Reserve, European Central Bank and four other central banks lowered interest rates today in an unprecedented coordinated effort to ease the economic effects of the crisis, which has led to the bankruptcy of Lehman Brothers Holdings Inc. and the government takeover of American International Group Inc. and Fannie Mae.

Shares Decline

Wal-Mart, based in Bentonville, Arkansas, fell 29 cents to $54.55 at 4:03 p.m. in New York Stock Exchange composite trading. The shares have increased 15 percent this year, compared with a 27 percent decline in the Standard & Poor's 500 Retailing Index. J.C. Penney decreased 4.6 percent while Costco dropped 1.3 percent.

September same-store sales climbed 1.7 percent on a preliminary basis, the International Council of Shopping Centers said today. The New York-based trade group, which had forecast sales to range from little changed to an advance of 1 percent, will release a final tally tomorrow.

``The consumer hasn't disappeared but is hunkered down, waiting to see the direction of the economy,'' said Craig Johnson, president of Customer Growth Partners LLC, a retail consulting firm.

Job Losses

A clampdown on loans and higher borrowing costs may exacerbate consumers' woes heading into the holidays. The U.S. lost the most jobs in five years in September, the Labor Department said Oct. 3. Gasoline prices remain 25 percent higher than a year earlier and home prices have tumbled.

Sixty-three percent of retailers who reported results today fell ``short of lowered expectations,'' Ken Perkins, president of Retail Metrics LLC, wrote in a report.

Many U.S. retailers are reporting September same-store sales results a day earlier than usual because of the Yom Kippur holiday. Some chains, including Limited Brands Inc. and Gap Inc. are scheduled to report results after the close of markets today or tomorrow.

Penney Drops

J.C. Penney, the third-largest U.S. department-store chain, said third-quarter profit will fall to 50 cents to 60 cents a share, less than the 70 cents to 75 cents it had forecast. Sales at stores open at least a year dropped 12.4 percent in September, the Plano, Texas-based company said.

Sixteen analysts surveyed by Bloomberg estimated average profit of 72 cents a share.

Luxury department-store chains also reported sales declines. Nordstrom Inc. posted a 9.6 percent drop and said quarterly profit would be 32 cents to 37 cents a share, less than its previous forecast of as much as 54 cents.

Saks Inc. fell 11 percent, and the company said revenue for the second half of the year would be less than it had forecast. Neiman Marcus Group Inc. said sales sank 13 percent, the worst drop since September 2001.

`Weak' Demand

``Based on our September performance and the current economic environment, we expect customer demand will remain weak for an extended period of time,'' Neiman Marcus Chief Executive Officer Burton Tansky said in a statement.

Wal-Mart had predicted a September sales gain of 2 percent to 3 percent. The retailer reaffirmed third-quarter profit would be between 73 cents to 76 cents a share. October sales may increase as much as 2 percent.

Wal-Mart ``reported heroic results, while the economy had a significant slowdown,'' David Katz, who helps manage Wal-Mart shares among $1.4 billion in assets at Matrix Asset Advisors in New York, said today in a telephone interview.

Costco, the largest U.S. warehouse club, said today that fourth-quarter profit rose 6.8 percent. Its September sales gain of 7 percent trailed analysts' estimates of a 7.3 percent increase, based on data compiled by Retail Metrics, based in Swampscott, Massachusetts. Warehouse retailer BJ's Wholesale Club Inc. posted a 10.4 percent gain.

Target May Miss

Target, the second-largest U.S. discount retailer, said third-quarter profit may be ``slightly below'' analysts' estimate of 52 cents a share after same-store sales declined 3 percent. The company expects more people to be unable to pay their Target credit-card bills.

Kohl's said third-quarter earnings would be at the low end of its forecast of 51 cents to 56 cents a share. Customers are making ``need-based'' purchases, pushing monthly sales down 5.5 percent, the company said. Analysts were estimating profit of 54 cents.

Sales plunged 12 percent at department-store chain Dillard's Inc.

Teen retailer American Eagle Outfitters Inc. lowered the high end of its third-quarter forecast to as much as 34 cents a share from 36 cents. Pacific Sunwear of California Inc. said third-quarter results would be at the ``low end'' of its forecast. Both reported comparable-store sales declines.

Holiday Sales

The National Retail Federation has forecast the worst holiday season since 2002. The holiday period accounts for 20 percent to 35 percent of a retailer's annual revenue. Chains including Kohl's and J.C. Penney have reduced inventory to try to preserve profit margins as sales slump.

``Managing inventory will be a clear determination of success,'' said Johnson, based in New Canaan, Connecticut.

Same-store sales are considered by some investors to be the best measure of retail health because they exclude the effect of location openings and closings in the past year.

Sears Holdings Corp. and Macy's Inc., the two largest department-store chains, don't release monthly results.

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net.

Last Updated: October 8, 2008 16:14 EDT