The holidays haven't been very happy thus far for Federated Department Stores ( FD). The Cincinnati-based company, which owns Bloomingdale's, Macy's and the Rich's department store chains, has seen its sales drop sharply during the holiday season. Like many other retailers, Federated's same-store sales declined in November from the year-ago period. But the company's overall sales also have dropped and its problems have extended into December. Before it posted November sales, Federated had said that it expected its same-store sales for the November-December time frame to range from flat to a 2.5% decline, compared with the same period last year. After posting November same-store sales that fell 7.4% over last year, Federated said it expected its sales for the two-month period to come in at the low end of expectations -- assuming its December sales were flat. It reiterated the estimate early Monday. But the company could do significantly worse than expectations. In a research report issued last week, Stacy Turnof of Merrill Lynch projected that Federated's same-store sales could decline as much as 3.5% over last year for the two-month time period. Federated's troubles are part of a "consumer spending slowdown that we've been seeing," Turnof said. "We're forecasting a poor Christmas selling season." (Merrill Lynch does not have any investment banking business with Federated.) For its part, Federated said it was "disappointed" in its November sales. Meanwhile, sales in the first week of December were difficult due to the winter weather that hit the East Coast, the company said. (It offered no further details in its Monday update.) "It is difficult to forecast December sales on the basis of what we have seen in November because while Thanksgiving weekend was strong, sales earlier in the month were weaker than expected," said James Zimmerman, Federated's chief executive, on Dec. 4. "Therefore, at this point we are anticipating sales at the lower end of our expectations for the combined November-December holiday period."