October Sales: Gains Stronger Than Expected

Old Navy store front

Leading retailers say October turned out to be unexpectedly solid, with consumers spending more freely than expected.

The International Council of Shopping Centers, which tracks leading chains around the U.S., says its index gained 2.1% for the month, the strongest gain in 15 months. And Retail Forward, a consulting company that tracks a slightly different group of stores, says its index saw a pop of 2.3% compared with a 0.9% gain last month and the 3.8% decline in October of 2008.

In some cases, it seems clear that shoppers are just a little tired of holding back. "The improvement in the stock market has had a significant impact on the affluent shopper's willingness to spend -- as the luxury market has shown its first positive reading since May 2008," the ICSC notes in its report.

While comparable store sales dropped 6% at Neiman Marcus for the month, two other high-end retailers reported gains after months of declines: Nordstrom was up 6.5% and Saks' sales inched up 0.7%.



Among specialty chains, the big news was the Gap, which delivered its first positive sales results in years, and raised its financial forecast for the coming quarter. While the San Francisco-based company says that overall comparable-store sales gained 4%, including a decline of 6% at its flagship Gap brand, sales jumped 14% at Old Navy and 5% at Banana Republic. Among other specialty chains, the Limited, which owns Victoria's Secret, saw its monthly results sink 4%.

Most department stores' results declined: Sales at Dillard's fell 8%, JCPenney 4.5% and Macy's 0.8%, while Kohl's says its sales advanced 1.4% for the month. Other stores that stress value also performed well: Sales at TJX -- which owns T.J. Maxx and Marshalls -- spiked 10%, while Ross Stores says sales rose by 9%.

The teen chains struggled, with Abercrombie & Fitch posting a 15% decline in comparable-store sales, American Eagle Outfitters down 5%, Hot Topic down 2.6% and Wet Seal down 1.3%. Buckle says its sales advanced 4.3%, while Aeropostale's were up 3%.

Earlier this week, ICSC released its holiday spending survey, done in conjunction with Goldman Sachs, which found that consumers say they plan to spend about $543 on gifts this holiday season, plus another $133 on gift cards. More shoppers plan to hit the malls right after Thanksgiving: 16% say they plan to shop on Black Friday -- up from 13% last year, and 10% in 2007.

While that signifies that consumers will be intent on bargain-hunting, the ICSC thinks it means they will spend, too. It predicts that comparable-store sales will increase between 5% and 8% in November.

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