Shoe retailer Footstar ( FTS) said August same-store sales were lower than expected, dropping 5.1%, largely because of weakness in the company's athletic division and a slow start to the back-to-school season.

The company also slashed its third-quarter earnings outlook because it expects the disappointing sales trend to continue.

The company sells athletic shoes through Footaction and Just For Feet stores and discounted footwear at its Meldisco division. Footstar's athletic shoe stores saw same-store sales slide 7.5% in August, while Meldisco's comparable-store sales fell 2.2%.

August total sales dropped 10.7% to $225.7 million, down from last year's $252.7 million. Meldisco's total sales were $106.8 million, down 12%, while athletic-segment sales fell 9.5% to $118.9 million. The company said Footaction's results were especially disappointing because the sluggish sales seen in July continued through August.

The company now expects third-quarter earnings of 55 cents to 60 cents a share, excluding charges, down from a previous forecast of 90 cents to $1.10 a share. Analysts, on average, were looking for a profit of 97 cents.

Footstar's warning came the same day a competitor, Finish Line ( FINL), lowered its own guidance. Finish Line now expects second-quarter sales of $203 million to $205 million, down from its prior forecast of $210 million. The company posted a top line of $196.8 million in the second quarter a year ago.

Finish Line also said same-store sales for the quarter will be flat to up 1%, below its previous projection of a 4% increase in comp sales.

The company now believes earnings will be 34 cents to 36 cents a share, compared with previous guidance of 45 cents to 47 cents. Finish Line earned 41 cents in the same quarter last year.

Shares of Footstar and Finish Line were sinking on the lowered outlooks. Footstar was down almost 17% to $11.30, while Finish Line was falling 16% to $8.81.