Borders Group ( BGP) expects to miss its earlier profit forecasts for the fourth quarter due to disappointing holiday sales and higher-than-expected charges.

The book retailer said Monday that same-store sales at its U.S. Borders superstores declined 1.9% in the nine weeks ended Dec. 30, missing management's expectation. At the smaller Waldenbooks chain, same-store sales tumbled 6.3%, also below company forecasts.

The company said the drop at Borders was driven primarily by a decline in store traffic. Music sales also were in steep decline.

Borders said the weaker-than-expected sales, as well as heavy investments in its "Borders Rewards" loyalty program, ate into margins. In addition, the company expects charges in the fourth quarter -- previously pegged at 8 cents to 14 cents a share -- will be higher than estimates due to increased closures of Waldenbooks stores and asset impairments.

As a result, Borders now expects fourth-quarter earnings will fall below its prior forecast of $1.80 to $2 a share, and full-year profits will miss estimates as well. Analysts polled by Thomson First Call expect earnings of $1.90 a share for the fourth quarter and 58 cents a share for the year.

"The holiday season was very competitive and highly promotional. We are disappointed that store traffic and sales trends were not better, especially considering the significant investment made in the Borders Rewards loyalty program," said Borders Group Chief Executive George Jones in a statement.

Last week, Borders rival Barnes & Noble ( BKS) said same-store sales for its holiday period fell 0.1%, missing the company's projection for a flat to low-single-digit increase. Barnes & Noble also noted a "highly promotional and competitive environment" and said it expects earnings to be in the low to middle range of its earlier guidance.

Shares of Borders were falling 93 cents, or 4.2%, to $21.16 in after-hours trading.