Consumers, enticed by cooler weather, early holiday discounts and an improving economy, spent a little more in October,
handing the retail industry its second consecutive monthly sales gain after more than a year of declines.
Even affluent
shoppers, who had been tight with their purses since the financial meltdown last year, spent more for designer duds.
As
merchants announced their figures Thursday, the results showed that shoppers still were not splurging, restrained by tight
credit and a weak job market. But the improving figures and tone of the reports all pointed to a sales momentum, encouraging
signs as the industry heads into the holiday shopping season.
According to the International Council of Shopping Centers-Goldman
Sachs tally, sales at stores opened at least a year rose 2.1 percent, beating estimates for a 1-percent gain. That followed
a surprising 0.6 percent increase in September.
The figures are based on sales at stores open at least a year and are
considered a key indicator of a retailer’s health.
October business was helped by a number of factors. Cooler weather
helped boost sales of plaid shirts, leggings and boots. And early holiday discounts also may have drawn shoppers last month
to get a head start on Christmas buying. Those with money to spend, are now becoming a little more generous, soothed by improving
signs in housing and the stock market.
Among the bright spots were Costco Wholesale Corp.; TJX Cos., which operates
T.J. Maxx and Marshalls, and Gap Inc., all of which reported solid gains for October. But the biggest surprise were the rebounding
sales at luxury retailers like Saks Inc. and Nordstrom Inc.
Children’s Place Retail Stores, Wet Seal Inc. and Stage
Stores Inc. all reported declines. Limited Brands Inc., which operates Victoria’s Secret and Bath & Body Works, reported
a bigger-than-expected sales drop of 4 percent.
"Improved macro conditions are leading shoppers to spend more on
discretionary purchases," said Ken Perkins, president of retail research firm Retail Metrics."This should bode well
for Christmas."
But retail sales figures are mainly starting to look better because they are being compared with
the free fall in spending a year ago.
Analysts still have plenty of concern about the fragility of American consumers
who continue to grapple with tight credit and weak employment. More than 6 million additional people were jobless in September
2009 than in September 2008. Predictions for Labor Department figures to be released Friday are expected to show unemployment
ticking up to 9.9 percent in October, from 9.8 percent in September.
As a result, consumer confidence has been choppy
in recent months, rising above its February low, but still far from levels that would mean the economy is on solid footing.
Against
the uncertain economic backdrop, discounters and wholesale club operators continue to benefit as shoppers still want low prices
and necessities.
Costco said Thursday that sales at stores open at least a year climbed 5 percent in October, helped
by strengthening foreign currencies. Analysts surveyed by Thomson Reuters had expected a 4.7-percent gain.
Target Corp.
posted a 0.2-percent decline in October; analysts had expected results to be unchanged from a year ago. The retailer said
that sales of necessities like health care products rose, but electronics and sporting goods sales were weaker.
Wal-Mart
Stores Inc., the world’s largest retailer, stopped reporting sales at stores opened at least a year on a monthly basis after
it released April results.
But many apparel chains are starting to see their fortunes improve as shoppers treat themselves
a little more.
Gap Inc., boosted by surging sales at Old Navy, reported a 4-percent gain in October.
Among department
stores, Macy’s Inc. posted a 0.8-percent decline in sales at stores open at least a year. J.C. Penney Co. had a 4.5-percent
sales drop, worse than the 2.3-percent decline that analysts anticipated. The company said that women’s apparel and shoes
were top performers, but fine jewelry continued to experience weaker sales.
Luxury stores Nordstrom and Saks Inc., which
operates Saks Fifth Avenue, posted solid gains, offering hope for a luxury sector that had been hit harder than anyone.
Saks
posted a 0.7-percent sales gain, much better than the 3.6-percent drop that Wall Street had expected. Nordstrom enjoyed a
6.5-percent gain; analysts had estimated a more modest 3-percent increase.
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