Overshadowing a narrower-than-expected third-quarter loss, retailer Macy’s (M) issued a cautious outlook on Wednesday for the current quarter, a potentially ominous sign for the upcoming holiday shopping season.

The department-store operator forecast a 1% to 2% drop in same-store sales for the fourth quarter, which will likely translate to a profit of $1.00 to $1.05 per share. While a marked improvement from the previous quarter, that EPS would miss the Street’s view of $1.17 a share.

Macy’s said it sees 2009 EPS of $1.01 to $1.06, which would miss analysts’ forecasts for $1.11. The company also said it sees same-store sales tumbling between 5.4% and 5.7% for the year.

The weaker-than-expected outlook weighed on Macy’s shares in the premarket as its stock sank to $18.55 after closing at $19.43 on Tuesday. The company’s shares have more than quadrupled since plummeting to $5.07 during the darkest days of the recession.

For the third quarter, Macy’s lost $35 million, or 8 cents a share, on a net basis, compared to a loss of $44 million, or 10 cents a share, in the same period of 2008. However, on an adjusted basis, Macy’s lost 3 cents a share, beating the Street’s expectation of a loss of 7 cents.

Macy’s said its sales fell 3.9% to $5.28 billion last quarter, narrowly exceeding consensus estimates for $5.25 billion.

“Given the difficult economic climate, we had an excellent quarter. Our business improved progressively each month during the period and we are entering the holiday selling season confident in our locally-focused organizational structure and the high caliber of our talent,” Macy’s CEO Terry Lundgren said in a statement.