The company was hit by declining housing markets in California and Florida, where it experienced the bulk of its poor sales, though effects were felt nationwide. A drought in some states hurt sales in the chain's nursery department.

Robert Niblock, the retailer's chairman and CEO, called the challenges in the home-improvement sector "greater than anticipated." "They are likely to last longer than we expected," he said, venturing that poor economic conditions could continue into next year.

For the fourth quarter, executives predict a 3%-to-5% same-store sales decline and a total-sales increase of 3%. For the full year, total sales are expected to rise 3% to 4%, and management is forecasting a 4% same-store sales drop.