Consumers Holding on Tight to Extra Cash

New York, NY, Oct. 8, 2008--Consumers held on to their money in September, sticking to buying the bare-bone essentials and leading many retailers to report dismal sales for the month as skittish consumers grappled with the global financial meltdown.

The weak reports are fueling more worries about the holiday season and the overall economy, since consumer spending accounts for two-thirds of all economic activity.

As retailers reported their sales figures Wednesday, even discounters weren't immune to shoppers' mounting worries about their financial security.

Wal-Mart Stores Inc., the world's largest retailer, and wholesale club operator Costco Wholesale Corp. both reported solid sales but results were a bit shy of Wall Street estimates. Target Corp. reported a bigger-than-expected sales drop and cut its earnings outlook as it grapples with a surge of customers defaulting on the company's store credit card payments.

Luxury stores such as Saks Inc., which operates Saks Fifth Avenue, suffered big sales drops, while many mall-based apparel stores and department stores including J.C. Penney Co. and American Eagle Outfitters Inc. found themselves mired in a deep sales slump.