Nearly 74 percent of retailers who reported same-store sales results on Wednesday came in below expectations for September, Reuters reports.

Department stores, particularly those catering to luxury shoppers like Saks Inc., suffered the most in the month and many of the top chains cut their earnings forecasts.

Even discounters like Wal-Mart Stores Inc. and warehouse clubs like BJ's Wholesale Club Inc. fell short of Wall Street expectations, though they are still expected to benefit as cash-strapped consumers seek out their low prices.

"It's going to be a real tough holiday season, and I think that it's prudent of them to come out and lower expectations because nobody really knows what's going to happen in this environment," said John Langston, senior analyst at Hodges Fund.

Based on retailers who reported on Wednesday and estimates for others yet to post results, Thomson Reuters said overall same-store sales are on track to show a 1 percent rise, below its initial forecast of an overall increase of 1.5 percent.

The specialty apparel retailers due to report later on Wednesday and on Thursday are mostly expected to post declines in same-store sales.

Looking ahead, October sales are expected to increase 1.5 percent to 2.5 percent, with tough economic conditions persisting, the International Council of Shopping Centers said.

The gloomiest forecasts have predicted that holiday sales could be the weakest in up to 17 years.

The Standard & Poor's Retail Index was up half a percent in afternoon trading, performing in line with the wider market. Wal-Mart rose 1.7 percent, while Saks fell 12 percent.

A Turning Point?
For months, consumers have sought deals for staples such as food and fuel, as they have battled higher prices, a housing market slump, job losses and a credit crunch.

Many balked even more at spending in September as the financial crisis deepened, with several big U.S. financial companies failing or accepting shotgun buyouts.

"Nobody knows how much worse the economy is going to get," said Morningstar analyst Joseph Beaulieu.

Coordinated interest rate cuts from global banks added to volatile trading in the sector on Wednesday. Still, shares of discounters and warehouse clubs did not suffer as much, indicating that some investors may consider them a better bet.

"The wholesale clubs and discounters are still the safest place to hide your money if you're an investor in this environment," said Telsey Advisory Group analyst Joseph Feldman.

During the month, shoppers largely preferred discounters like Wal-Mart and warehouse clubs such as Costco Wholesale Corp. and BJ's for necessities like food and fuel.

Wal-Mart posted a 2.4 percent increase in September sales at stores open at least one year. Analysts had expected a 2.5 percent increase, according to Thomson Reuters Estimates. Its rival Target Corp. posted a worse-than-expected decline of 3 percent in same-store sales. Costco posted a 7 percent jump in same-store sales while rival BJ's posted a rise of 10.4 percent. Both companies still trailed expectations.

Department Stores Languish
Department stores continued to suffer in September, as consumers shunned items like clothes and accessories, forcing retailers to cut their earnings or sales forecasts.

Same-store sales at J.C. Penney Co. Inc. fell 12.4 percent, worse than the 9.9 percent drop analysts had expected. Penney cut its third-quarter earnings and sales forecasts.

Not even upscale stores were spared. Same-store sales fell more than expected at Saks and Nordstrom Inc. -- 10.9 percent and 9.6 percent, respectively -- which also cut their forecasts and signaled that economic worries were taking a toll on affluent shoppers.