(CNN) -- Big-spending Schalke are rooted to the bottom of the German Bundesliga table, without a point from four matches, after visiting local rivals Borussia Dortmund beat them 3-1 in Sunday.
Japan midfielder Sinji Kagawa scored twice, with Polish striker Robert Lewandowski heading home a third goal.
Klaas-Jan Huntelaar scored a late consolation goal for the home side, who also had French defender Nicolas Plestan sent off following two bookings.
Coach Felix Magath, who led the Blues to second place last season as well as winning the Bundesliga with both Bayern Munich and Wolfsburg, told reporters that he was at a loss to explain Schalke's poor start to the season.
"This is the worst day for me since I have been at Schalke. I have never experienced such a start to the league, the defeats have left their marks on us," said Magath.
"The group has lost all their confidence, I have never seen that before in a team of mine."
The Ruhr Valley derby victory moves Dortmund up to third position in the table, three points behind leaders Mainz, who have the division's only 100 per cent record.
In other matches, Hamburg are up to fifth place after Mladen Petric's long-range strike earned his side a 1-1 draw with city rivals St Pauli.
Elsewhere on Sunday, Bayer Leverkusen are locked in mid-table after being held to a goalless draw by Nuremberg.