Retailers post weak October sales

By Karen Jacobs

ATLANTA (Reuters) - Most U.S. retail chains suffered through a dismal, record-warm October, with leader Wal-Mart Stores Inc (WMT.N) falling short of Wall Street same-store sales estimates and the apparel sector continuing to struggle.

Experts said the weak October sales, coming as consumers grapple with higher food and gasoline prices in an economy shaken by the U.S. housing meltdown, likely did not bode well for the holiday shopping season.

Consultants TNS Retail Forward said an October poll indicates more shoppers are planning to spend less for Christmas than last year, especially lower-income buyers who face job worries.

"We're just seeing a reflection of all the factors out there that are affecting consumers," said Britt Beemer, chairman of America's Research Group, which also studies consumer behavior. "This softness in October will translate into continued softness in November and December."

According to research firm Retail Metrics, 70 percent of retailers missed sales expectations for October as department stores and most specialty apparel sagged. Warehouse clubs fared best, helped by higher fuel prices, which encourage people to buy more on single shopping trips.

The International Council of Shopping Centers said the month's same-store sales performance -- an overall rise of 1.6 percent year-over-year -- represented the slowest October growth since 1995.

The Standard & Poor's Retail Index .RLX was off less than 1 percent in afternoon trading.

Wal-Mart reported a lower-than-expected 0.4 percent rise in monthly same-store sales at U.S. stores. The company, which has aggressively cut prices on toys and other goods, forecast that November same-store sales would be flat to up 2 percent.

Wal-Mart's "core shopper, a lower-income shopper, is hurting a bit more this year," said Frank Badillo, an economist with TNS Retail Forward. "There's been more job-cutting among blue-collar workers."

Rival discounter Target Corp (TGT.N) said same-store sales rose 4.1 percent in the month, better than the 2.5 percent analysts expected, as more shoppers arrived late in the month.

Warehouse clubs Costco Wholesale Corp (COST.O) and BJ's Wholesale Club Inc (BJ.N) also reported better-than-expected sales, benefiting from fuel price increases.

"I think people are consolidating trips with gasoline so high," said Sarah Henry, an analyst with MFC Global Investment Management.

WARM WEATHER EFFECT

Apparel chains continued to suffer as warmer temperatures hurt sales of sweaters and coats. Temperatures in the eastern two-thirds of the United States averaged 5 to 8 degrees warmer than usual, and cities such as New York recorded their hottest October ever, according to weather tracker Planalytics Inc.

Limited Brands Inc (LTD.N) disappointed with a 6 percent same-store sales drop against the 1.8 percent fall analysts had expected. Gap Inc (GPS.N) had an 8 percent same-store sales drop, and Chico's FAS Inc (CHS.N) posted a 10.6 percent sales slide and said profit would slump in the current quarter.