Third quarter profit at Nordstrom Inc has more than halved after sales slumped, with the fashion retailer now saying it now expects same-store sales to fall as much as 16% during the all-important holiday quarter.

The Seattle based retailer is also planning to scale back its expansion over the next two years.

Nordstrom, which operates 169 stores, saw net earnings fall to $71m, or $0.33 per share, in the three months to 1 November, down from $166m, or $0.68 per share, a year earlier.

Total sales in the quarter fell 8.4% to $1.81bn billion, down from $1.97bn last time, with same-store sales down 11.1%.

Same-store sales at full-line stores dropped 15.6% in the quarter, but rose 3.6% at its off-price Nordstrom Rack stores and increased 8.5% at its online Direct segment.

Gross profit, as a percentage of sales, fell 332 basis points and inventory per square foot was down 3% from the prior year.

Selling, general and administrative expenses rose by 2.6% or $14m, the company said.

Looking ahead, fourth quarter earnings per share are expected to be in the range of $0.35 to $0.45, with same-store sales falling by 13% to 16%.

For fiscal 2008 earnings per share are forecast in the range of $1.87 to $1.97, with same-store sales falling 9% to 10%.

Expansion will also slow, with capital expenditures down to $350m in 2009, compared with $510m in the current year.

One full-line store and three new full-line stores are due to open in 2009 and 4-5 new full-line stores in 2010.