New York, NY, Nov. 6--Consumers took a break from spending in October, giving retailers only modest sales gains after three months of robust increases. But some analysts said the industry's overall improved sales trend was still in place and that retailers were poised for a solid holiday season.
As the nation's largest merchants reported results Thursday, discounters, drug stores and wholesale clubs fared the best, benefiting from strong sales of Halloween candy and costumes. Department stores and mall-based apparel retailers struggled, unable to sell consumers cold weather wear amid higher-than-usual temperatures in the Northeast and Midwest.
Wal-Mart Stores Inc., the world's largest retailer, and Costco Wholesale Corp. had results above Wall Street estimates. Kohl's Corp. was one of the biggest disappointments, posting sales declines much steeper than expected.
"The weather lowered the sales potential, but the numbers are still decent," said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd. He said the results still "fit the improving landscape," and merchants can expect a good holiday season.
The company's tally of sales from 74 retailers was up 3.2%, better than the reduced 2.5% gain Niemira forecast. That compared with a 3.2% sales increase in the year-ago period. The October figure followed a robust 5.9% gain in September, and a 5.1% increase in August.
The bank's index is based on sales from stores open at least a year, known as same-store sales. They are considered the best indicator of a retailer's health.
Partially offsetting the weakness in apparel were strong sales of furniture and home-related items, he said. For example, The Bombay Co. Inc. noted that October furniture sales "led the way with the strongest increase compared with last year."
For the November and December period, Niemira expects same-store sales to rise an average 4.5%, the best performance since 1999, when same store sales rose 5.4%.
The Washington-based National Retail Federation projects total holiday sales, which exclude restaurant and auto sales, to be up 5.7% to $217.4 billion.
Steve Spiwak, an economist at Retail Forward, a consulting firm in Columbus, Ohio, believes consumers were "taking a breather" after binging in the summer, and called the October results "a small blip."
Still, he said, over the past few months consumers have been spending the tax rebates they received this summer; when that money is gone, retail sales are likely to show some signs of slowing.
Marshal Cohen, senior industry analyst at NPD Inc., a market research company based in Port Washington, NY, was more cautious.
"There is no injection of money into the consumers' wallet," he said. "The holiday is coming on," and there's no feeling that consumer have to "run out and buy something."
Nonetheless, a pair of reports from the Labor Department provided further evidence of an economic rebound.
Productivity--the amount an employee produces per hour of work--rose at an annual rate of 8.1% in the third quarter, the best showing since early 2002. That was up from a 7% gain in the second quarter, the department said. The third-quarter performance, however, was slightly weaker than the 8.5% growth rate that some economists were predicting.
In a second report, new applications for jobless benefits last week fell by a seasonally adjusted 43,000 to 348,000. That represented the lowest level since the week ending Jan. 20, 2001, and was much lower than the 380,000 economists expected.
