• by Sarah Mahoney , November 6, 2008

Ouch, ouch, and triple ouch: The nation's leading stores turned in October sales reports that were even more dismal than most observers expected--their worst performance since 1969.

Overall, the International Council of Shopping Centers says that its index of the largest chain stores fell 0.9% for the month--its lowest level since 1969, according to a spokesperson for the trade group. And TNS Retail Forward--a Columbus, Ohio-based consulting group that tracks a slightly different set of stores--says its index fell 0.6%.

Once again, Wal-Mart Stores came out a winner--reporting that same-store sales in its U.S. Walmart division gained 2.2%, without gasoline sales, and that sales at its Sam's Clubs unit gained 3.6%. The Bentonville, Ark.-based retailer says it is also seeing increases in store traffic. Wal-Mart attributes this to its "highly competitive pricing strategies," as it says in its statement. "Customers see that we are broadening the price gap against our competitors."

Similarly, BJ's Wholesale Club saw a big bounce from bargain-hungry shoppers, with comparable-store sales gaining 10.2%, which includes a 3.6% gain from gasoline sales. The Natick, Mass.-based company says its traffic is up 6% for the month compared to last year.

But just about every other major retailer--including discounter Costco, which until now had also been seeing strong numbers--reported sales declines. Costco's comparable-store sales slipped 1%, while sales at Target fell 4.8%, and TJX, which owns T.J. Maxx and Marshalls, says sales dropped 6%.

Continuing the trend of recent months, specialty stores posted the steepest drops, with sales at Gap Inc. sinking 16%, Limited Brands, which owns Victoria's Secret, falling 9%, and Chico's decreasing 13.4%. And the news was worse among specialty stores reporting quarterly results: Ann Taylor says its comparable-store sales for the third quarter nosedived 19%, "with trends weakening dramatically as the quarter progressed." It announced a new streamlining program, and lowered its earnings forecast for the quarter ahead. And Talbot's reported a 13.9% drop in comparable-store sales for the quarter, and announced it would try to spin off its J. Jill unit.

Department stores also suffered. And while higher-end stores fared worst--with same-store sales at Saks falling 16.6%, Nordstrom 15.7%, and Neiman Marcus 14.5%--mid-tier stores were punished as well. JCPenney reported a drop of 13%, Kohl's 9%, Dillard's 8%, and Macy's 6.3%.

While both Buckle (up 14.5%) and Hot Topic (up 8.3%) fared well in the teen sector, most others suffered. Abercrombie & Fitch says its same-store sales tanked 20%, while results at American Eagle Outfitters fell 12%.

Wal-Mart, meanwhile, is making full use of its discount advantage. The company says its "Operation Main Street" will translate into thousands of rollbacks in the next seven weeks, which it says will save shoppers $200 million "over and above its everyday prices."

The company also says it is kicking off the Christmas season in consumer electronics with a one-day event this Saturday, offering a Sony MP3 player for $49, and $100 Walmart Gift Cards with the purchase of a $399 Sony PlayStation 3.