Modest October sales may spur holiday deals

NEW YORK - Shoppers took a breather in October, resulting in lackluster gains for retailers and raising the stakes on what is sure to be a competitive holiday season.

For shoppers, that means heavy discounts will come early and often.

"The deals will be so attractive that shoppers may not want to wait," John Long, retail strategist at Kurt Salmon Associates Inc., said Thursday as major retail chains released October results. "This is going to be a great [time] to be a consumer."

The International Council of Shopping Centers index measuring revenue at stores open at least a year showed a 1.6 percent increase in October, the weakest performance since April's 0.8 percent increase. October's figure represented a slowdown from September, when sales increased 2.6 percent. It was also below the average pace of 3.2 percent since the start of retailers' fiscal year, which begins in February.

Sales at stores open at least a year - called same-store sales - are considered a key indicator of a retailer's health because they exclude results from newly opened stores.

Behind October's results were clear winners and losers. Luxury stores including Neiman Marcus Group Inc. and Saks Inc. were the best performers as affluent shoppers have recovered from the recession more quickly than everyone else amid a rebounding stock market.

Macy's Inc., powered by its sweeping initiatives to tailor merchandise to local markets, had a decent performance, outshining rivals such as J.C. Penney Co. Inc. and Kohl's Corp., both of which reported declines.

Warehouse club operators such as Costco Wholesale Corp. fared well. Target Corp. posted a small gain slightly above Wall Street estimates. Target noted that essentials were selling better than nonessentials.

The big factor depressing October sales was the unusually warm weather, which cut sales by one percentage point, said Mike Niemira, chief economist at the International Council of Shopping Centers. Last month was the warmest October in 15 years, according to forecaster Weather Trends International.

The weather effect was felt in the Philadelphia area by such companies as the Burlington Coat Factory Warehouse Corp., which cited the higher temperatures as a reason for less merchandise being moved. Its sales were down 5.6 percent compared with October last year. Chief executive officer Tom Kingsbury said he expected sales to improve as temperatures reached normal seasonal levels.

Destination Maternity Corp., Philadelphia, reported a slim 0.6 percent increase in same-store sales, partly driven by launching of leased departments in other store brands.

Nationally, holiday competition already looks fierce. Many merchants have started pushing early-morning discounts on holiday gifts. They are also expanding layaway programs to help shoppers stretch their gift buying. Sears Holdings Corp. even plans to open its doors Thanksgiving Day.